Welcome to Insider Healthcare. I’m healthcare editor Leah Rosenbaum, joined by senior healthcare reporter Megan Hernbroth, and this week in healthcare news:
Private funding for healthcare startups has already smashed records.
The industry had eclipsed $20 billion in total funding raised by the end of September, which was already double the entirety of private funding in 2020, according to a Rock Health report.
The presentations were largely published in full with minimal edits from the versions that founders showed to investors in-person or virtually.
Through an additional analysis, a few common traits emerged among the most successful presentations:
First, the presentations typically included at least 10 slides. On average, the presentations were between 13 and 15 slides in total, with a few distinct outliers like Tia that included more than 20 individual slides.
Most presentations also included industry data making the business’ case to investors. For some companies like Twin Health, this meant including demographic data along with anecdotal data to more accurately estimate the potential market size of the company. These figures often help investors decide on a company’s valuation during the deal negotiation process.
Longer presentations often included customer testimonies as well, whether via customer reviews or social media accounts of a patients’ experience.
Our reporters have been busy analyzing the trends of 2021 — and looking forward to what is going to happen next year.
Allison DeAngelis and Andrew Dunn took a look at the biggest IPOs of 2021, and the investors who currently hold the most sway in the sector. These investors are good to keep an eye on: they’re likely the ones who will be making more big moves next year.
Visitors are pictured in front of an immersive art installation titled “Machine Hallucinations — Space: Metaverse” by media artist Refik Anadol. REUTERS/Tyrone Siu/File Photo
REUTERS/Tyrone Siu/File Photo
A South Korean metaverse platform scored a $1 billion valuation in a SoftBank-led funding round.
The platform, Zepeto, attracts female users who can dress their digital avatars in high fashion.
HYBE, the manager of K-pop sensation BTS, also poured money into the company.
SoftBank invested $150 million in a South Korean metaverse platform that allows users to dress up their digital avatars in high-fashion labels like Gucci and Dior, the Wall Street Journal reported.
With the Softbank-led funding round, the platform called Zepeto scored a $1 billion valuation, the Journal said. HYBE, the manager of K-pop sensation BTS, invested about $41 million.
The Journal said Zepeto, which launched in 2018, has 2 million active daily users, a majority of which are females 13-24 years old. For comparison, well-known metaverse gaming platform Roblox has more than 40 million active daily users.
According to its website, Zepeto allows users to create their own worlds where they can explore new spaces, hang out with friends, and play games. Users can also buy virtual items or make money by creating and selling their own. Gucci, for its part, launched a virtual space for users to dress their avatars, the Journal said, quoting Naver Z Corp Chief Strategy Officer Rudy Lee who said Zepeto is “probably the world’s largest virtual fashion marketplace.”
A March article from Vogue Business said Gucci has been building out its gaming strategy, in a move that brings in revenue and helps gamers express themselves. It’s partnered with Roblox, Pokemon Go, and The Sims, among others, and introduced its own platforms Gucci Arcade and Sneaker Garage, Vogue said.
Zepeto isn’t the first metaverse-related company Softbank’s Vision Fund II has backed. In early November, the fund poured nearly $100 million into Sandbox, a metaverse where one user bought a $650,000 digital yacht and where virtual land sales are soaring. Softbank did not immediately respond to Insider’s request for comment.
The concept of the metaverse — a digital world where people can interact — has become mainstream since the company formerly known as Facebook rebranded to Meta.
Teladoc and Livongo combined in what was the biggest digital health merger almost exactly a year ago.
Around the anniversary, Blake Dodge and Mohana Ravindranath spoke to employees within the company to see how the merger went.
In a word: messy. Our reporters discovered that more than 110 original employees of Livongo have left, including key members of the leadership team. They also found issues, including trouble with integrating software between the companies.
Our whole team of reporters have been working to compile a comprehensive list of the top healthcare transformers of 2021.
These movers and shakers include the surgeons, executives, scientists and entrepreneurs who are changing how we think of healthcare right now.
The list includes the researchers who helped develop COVID-19 mRNA vaccines, Google’s chief health officer, doctors who work to prevent gun violence, and others.
A metaverse startup got nearly $100 million in a funding round led by Softbank.
Sandbox is a virtual world where players can monetize digital assets like NFTs.
Snoop Dogg, The Walking Dead, and CryptoKitties have also partnered with the company.
A metaverse and NFT-focused startup scored nearly $100 million in a round led by a Softbank fund.
The startup, known as Sandbox, is is an ethereum-based metaverse that allows gamers to create their own virtual world and monetize digital assets, such as non-fungible tokens. For example, players can purchase plots of land they can build on, Coindesk reported Tuesday.
“In this era of new possibilities, The Sandbox is emerging as the main NFT-based, open metaverse, where the content, economy, and even governance will be in the hands of the players, creators, and users who contribute to this virtual world,” the company said in its press release.
The company is a subsidiary of Animoca Brands, a Hong Kong-based venture capital firm backing the metaverse and GameFi.
In its press release, Sandbox Cofunder Sebastien Borget said the Series B funding round will send “a clear statement that the world’s most innovative fund believes in Web3 and decentralization as the next major trend.” Executives from GoldenTree Asset Management, among others, also invested in the round, the press release said.
The startup has partnerships with brands and people, including Snoop Dogg, The Walking Dead, and CryptoKitties, and has more than 500,000 users with connected crypto wallets. Its cryptocurrency, aptly named “Sandbox,” has a $2.3 billion market valuation, according to data from CoinMarketCap.
Monday, another NFT-focused company called Sfermion got a $100 million funding round with big-name backers like the Winklevoss twins and two general partners from Andreessen Horowitz.
The announcements follow news that social media platform Facebook would be changing its name to Meta in an effort to forge into the future of the internet, the metaverse.
Warren Buffett, Michael Burry, and other leading investors recently disclosed the contents of their stock portfolios as of June 30, revealing they made a range of striking moves in the second quarter.
Funds linked to Bill Miller, Jim Simons, and the Church of Jesus Christ of Latter-day Saints all made notable changes to their holdings, signaling their views on everything from Elon Musk’s Tesla and Cathie Wood’s Ark Invest, to meme stocks such as GameStop and AMC Entertainment.
Here are five of the key trades last quarter:
Warren Buffett slashed his pharma holdings
CNBC/YouTube
Buffett’s Berkshire Hathaway took a knife to its pharmaceutical holdings last quarter. It sold around $260 million of AbbVie stock, $307 million of Bristol Myers Squibb stock, and $645 million of Merck stock, based on the companies’ average closing share prices in the period.
The famed investor’s company only bought into the trio in the third quarter of 2020, and boosted its holdings in the fourth quarter. Yet Berkshire turned around and sold roughly $2.4 billion worth of pharma stocks in the first six months of this year, slashing its AbbVie and Bristol Myers Squibb stakes by about 20% and its Merck position by 68%.
While Buffett has been interested in owning a basket of pharma stocks for decades, he hinted in May that he didn’t fully understand them and wasn’t too comfortable holding them. That may explain the recent disposals.
Michael Burry bet against Cathie Wood
Jim Spellman/Getty Images
Michael Burry of “The Big Short” fame purchased bearish put options against 235,500 shares of Cathie Wood’s flagship exchange-traded fund Ark Innovation last quarter.
The Scion Asset Management chief tweeted in February that the hype around Wood had reached excessive levels. He compared her to past growth investors whose luck ran out, and warned that “Wall Street will be ruthless in the end.”
Burry also ramped up his bet against Tesla last quarter. Elon Musk’s electric-vehicle company is one of Ark’s biggest holdings, underscoring Burry’s skepticism of the mass disruption and technological revolution that Wood believes is coming.
The Scion chief is best known for predicting the collapse of the housing bubble in the mid-2000s, and making a fortune by betting on that outcome. He also helped pave the way for the GameStop short squeeze in January by investing in the video-game retailer and agitating for changes at the company back in 2019.
Bill Miller bought into Coinbase
Investor Bill Miller, co-founder, CIO and fund manager for Miller Value Partners
Fox Business
Bill Miller’s fund, Miller Value Partners, bought around 122,000 shares of Coinbase worth $30 million last quarter. The investment underscores Miller’s continued faith in cryptocurrencies and the larger blockchain ecosystem.
Miller made his fortune as a value investor before losing 90% of it during the financial crisis. However, he’s a billionaire today thanks to early investments in Amazon stock and bitcoin.
Notably, his fund sold its GameStop shares before the video-game retailer’s stock went stratospheric in January, meaning it missed out on a massive windfall.
Jim Simons’ RenTech tripled its AMC stake
im Simons attends IAS Einstein Gala honoring Jim Simons at Pier 60 at Chelsea Piers on March 14, 2019 in New York City.
Sylvain Gaboury/Getty Images
Jim Simons’ Renaissance Technologies tapped into the meme-stock boom last quarter with a well-timed bet on AMC Entertainment.
The quantitative hedge fund, founded by the Cold War codebreaker and MIT math professor in 1978, tripled its stake in AMC in the three months to June 30. The movie-theater chain’s stock price skyrocketed nearly 500% in the period as retail investors piled in. As a result, RenTech’s position jumped nearly 20-fold in value to $103 million.
In contrast, RenTech slashed its stake in Tesla by 75% last quarter, reducing the value of its position to $138 million at the end of June.
The LDS Church cashed out its GameStop profits
A flag flies at half mask outside the world headquarters of the Mormon Church for Thomas S. Monson, President of the Church of Jesus Christ of Latter-Day Saints (The Mormon church) in Salt Lake City
Ensign Peak Advisors, the church’s $100 billion investment fund, invested in GameStop in the fourth quarter of 2020. The value of its position ballooned by about 900% in the first three months of the year thanks to the short squeeze on the stock.
Ensign didn’t list GameStop in its latest portfolio update, suggesting the fund cashed out the stake last quarter. It likely pocketed about $9 million from the exit, based on GameStop’s average closing share price in the period, or as much as $14 million it if sold when the stock surged in June.
Uber’s stock fell 5% in Thursday’s pre-market session after CNBC reported SoftBank will sell about a third of its stake in the ride-hailing firm.
SoftBank, one of Uber’s largest shareholders, plans to sell about 45 million of its 184 million shares, the report said. Any buyer is said to have a 30-day lockup period.
In January, the Japanese conglomerate sold 38 million Uber shares worth $2 billion.
Further shares were said to be offloaded in June, and SoftBank’s stake could stand at below 100 million shares with the latest transaction, according to a Financial Times report, which cited a person familiar with the matter.
China’s recent crackdown on rival ride-hailing app Didi has reportedly cost SoftBank, its largest shareholder, about $4 billion. It has also suffered losses related to the proposed initial public offering of Alibaba’s Ant Group, which was halted by regulators after Jack Ma publicly snubbed local banking rules.
But reports from Reuters and the FT say SoftBank’s decision to cut its Uber holding is unrelated to its stake in Didi, which went public on the US stock market in blockbuster IPO in late June. The tech conglomerate believed it was the right time to cash out and profit from its holding, a source told Reuters.
SoftBank has been an Uber investor since 2018, when it picked up a 16% stake in the firm through an entity called SB Cayman 2 Ltd. In a filing as recent as March 31, Uber refers to SoftBank as a “large shareholder.”
Softbank’s $100 billion Vision Fund has been hit hard by China’s regulatory crackdown on the tech sector, with the value of its holdings sliding $11 billion since July, compared to a $1.1 billion gain in the April-to-June quarter, according to data seen by the FT.
SoftBank didn’t immediately respond to Insider’s request for comment.
Uber’s stock, down 9% so far this year, had risen slightly a week ago after announcing its $2.25 billion acquisition of logistics tech company Transplace from TPG Capital.
Didi Global’s shares are fallen 37% since its first day of trading.
From left: Masayoshi Son, Rupert Murdoch, Jeff Sine, and Ari Emanuel.
Alessandro Di Ciommo/NurPhoto via Getty Images; Taylor Hill/Wire Image; Ben Gabbe/Getty Images for Common Sense Media; Amy Sussman/Getty Images; Raymond Boyd/Getty Images; Samantha Lee/Insider
Jeff Sine has built a career as an unorthodox banker.
He’s advised business moguls like Masayoshi Son and Rupert Murdoch.
The Raine Group, a media- and entertainment-focused merchant bank, is now a billion-dollar business.
From humble beginnings, Jeff Sine built a career as an unorthodox banker who offered unvarnished advice and tamed unruly transactions for business moguls like Masayoshi Son and Rupert Murdoch. He defied the odds and built merchant bank The Raine Group into an investing empire in its own right.
Insider spoke with 10 people who have worked with Sine throughout his career, including senior bankers and clients. They explained how Sine became one of the world’s most influential dealmakers, the origins of his relationships with Masa and other key clients, and how he built a billion-dollar business.
I’ve lost a lot of other people’s money. The most stressful times in my life have been when people believed in me and invested tens (if not hundreds) of millions in my company or idea, only to see their capital go up in smoke. I’ve also made a lot of people a lot of money – but only in America would someone with my (lack of) pedigree be given this many swings at the plate.
To be a truly great investor or operator/CEO, you need to be a bit of a sociopath: You have to be able to sleep at night even as you lose other people’s hard-earned money or lay people off. Working with OPM (i.e., Other People’s Money) is often phrased as a positive, but the real luxury is to be in a position to lose your own capital. If things go wrong, it’s a private failure.
The willingness to risk capital on a captain and harpoons (the 19th century whaling sector was proto-venture capital) has always been a key ingredient in the secret sauce of the US economy. But the secret is out. While the US still produces the most unicorns, and the most mega-corporations, China is gaining … fast. Interestingly, despite the rhetoric re: China challenging US hegemony, it’s European innovation that has drowned in the rising red tide. But that’s another post.
We should celebrate billion-dollar successes, so long as they come at the risk of failure – the whaling captain and the entrepreneur earn their wealth in part thanks to their willingness to come home empty-handed, or not at all. However, there’s a new class of billionaire in America. Meet the MeWork generation, which makes their fortunes despite returning to harbor with less than they embarked with.
To help identify members of the MeWork generation (they can be any age), we’ve devised two metrics: the Daily Benjamin Burn™ (DBB) and the Earn-to-Burn Ratio™ (EBR). The first is how much money an executive lit on fire per day during their tenure. The second is the percentage of those lost Benjamins they siphoned off for themselves – think of it as a commission on destruction. In an efficient and fair (dangerous word) market, the EBR ratio would be zero. If we can measure someone’s burn in daily stacks of 100-dollar bills, they’ve created no value and should get no compensation. Spoiler: That’s not what happens.
Daily Benjamin Burn™
What does the DBB look like in practice? A lot like Quibi. That likely won’t mean anything to you, unless you’re one of the dozens and dozens of people who subscribed to the short-lived short video service. In 2018, Jeffrey Katzenberg and Meg Whitman raised $1.75 billion, launched a bad app with worse content, and shut it down six months later. Roku combed through the rubble and found $100 million, so Jeff and Meg immolated $1.65 billion in 750 days, or $2.2 million per day. If you stacked that $1.65 billion in 100-dollar bills, you’d have a pile over a mile high, about two Burj Khalifas, the world’s tallest building.
Eating my own Benjamins
In 2008, I raised $600 million from a hedge fund, became the largest shareholder in the New York Times Company, and ran an activist campaign against the Gray Lady. They put me on the Board, where I ranted about the evils of Google, advocated for the divestiture of non-core assets, envisioned sunlit uplands of subscription revenue and … lit Benjamins on fire. During my 24-month tour of duty watching the Great Recession kick ad-supported media in the groin, I managed to turn $600 million into $350 million, for a DBB of about $350,000. The stack of Benjamins I lost would have reached only to the top of 30 Rockefeller Plaza. Only. Jesus …
Jeff, Meg, and I all made an old-school mistake. We failed to find a greater fool (e.g., the public markets, gullible board members, Softbank) to secure a mega payout for our Bonfires of the Benjamins. I was paid approximately $500,000 in board fees and a retainer from the fund; I speculate that Jeff and Meg pocketed more (their compensation remains private). But none of us took home millions.
That brings us to the Earn-to-Burn Ratio™ and the hall of fame for broken compensation.
EBR hall of fame
In 2012, Yahoo replaced its CEO with an executive from Google: Marissa Mayer. But the new CEO made a series of poor decisions, including canceling the company’s telecommuting policy while working from home herself and paying $1.1 billion for a porn site, Tumblr. (Note: Six years later, Yahoo sold Tumblr for $3 million.)
When Mayer took over, Yahoo (not including a 20% ownership stake in Alibaba) was valued at $14.4 billion. In July 2016 the company sold itself to Verizon for $4.5 billion, and Mayer was gone. That’s $9.9 billion turned to ash in four years (or 13.5 Burj Khalifas), for a DBB of $6.8 million. Mayer’s compensation began with a $30 million signing bonus and went up from there, totaling an estimated $365 million, giving her a $250,000-per-day commission for destroying $7 million per day of other people’s money. That’s an EBR of 3.7%. Shocking, sure, but not the gold standard.
Adam Neumann founded WeWork in 2010, but he didn’t start burning Benjamins at epic scale until Softbank began shoveling billions into the WeWork furnace in August 2017. By the time Neumann was fired in September 2019, Softbank had invested $10.3 billion; a few months later it wrote off $9.2 billion of that. That’s a $13.1 million DBB on Softbank’s money alone, or like flying a decade-old Gulfstream G450 (I browse planes at night – pathetic) into a mountain … every day. Impressive, but only half the story. Neumann’s compensation for this value destruction was complicated by his ouster and a subsequent lawsuit, but we estimate he made off with around $1.02 billion, most of it coming out of Softbank’s deep pockets. That’s $1.5 million per day during those two years: an EBR of 11.1%.
Joining Mayer and Neumann on the podium is Randall Stephenson, who ran AT&T from 2007 to 2020, when his chief lieutenant, John Stankey, took over. If you owned AT&T stock in 2007, you’ve collected $26 per share in dividends since, but you’ve also watched the share price drop from $39 to $29, for an aggregate annual return of 2.5%. This was a period when S&P 500 companies as a whole returned 9.8% a year – much of it on the back of AT&T’s own mobile and data networks – and AT&T’s competitor Verizon returned 7.9% to its shareholders.
How did Stephenson manage this? Among other mistakes, AT&T spent $67 billion to buy DirecTV (a pending massive write-off), blew $4 billion when it failed to acquire T-Mobile, and spent another $108 billion to buy WarnerMedia, which Stankey just sold to Discovery. To his (partial) credit, Stankey may have managed to net out the Warner deal as a wash.
So while Stephenson didn’t destroy capital outright, he was a poor steward. Had AT&T eked out even a 4% return from 2007 to today, it would have made an additional $50 billion for shareholders. That’s an implied DBB of $10 million. How did the Board respond to Stephenson’s 13-year-long sideways run at the iconic firm? His total comp was at least $250 million, including a $64 million pension as a parting gift. That’s an EBR of “only” 0.5%, but still a huge payout in the face of mediocre performance.
Honorable mention
In April 2014, toward the end of Steve Ballmer’s controversial run as CEO, Microsoft closed the $7.2 billion purchase of 1999’s leading mobile handset maker, Nokia. Just 15 months later, Ballmer was gone, and the company wrote off $10 billion for the failed acquisition – the deal was so bad it ended up costing Microsoft more than it paid, mostly due to severance for laid-off Nokia employees. That’s an incredible $22.2 million per day, the highest DBB we could find. (Ballmer only made $1.65 million his last year at the company, so a minimal EBR.)
Burning Benjamins doesn’t just happen in the US. In 1998, Daimler-Benz acquired Chrysler for $35 billion in the largest industrial merger ever at the time. After nine years of culture clash and billions in losses, Daimler unloaded 80% of Chrysler to a private equity firm for $7.4 billion, valuing the company at $9.25 billion. That equates to an impressive $7.8 million DBB.
How do these corporate money losers compare to the largest and longest-running Ponzi scheme in history? Bernie Madoff ran his fake fund for nearly 30 years, costing investors an estimated $19 billion. The date his fraud began is disputed, but assuming it was 1980, that’s a DBB of just under $2 million per day. A massive, decadelong legal project has repaid most of these losses through fines and settlements, and Madoff died in prison, but only after a multi-decade run paid for by the destruction of thousands of people’s economic security.
Growing up, I loved to watch my dad pack for business trips. He smelled of Aqua Velva and draped his Izod sweaters over a Ram Golf bag. He’d iron the mammoth collar of his Pierre Cardin shirts, fold them around a piece of wax paper, and lay them into his Hartmann luggage like newborns. It was ceremonial, just as when he’d wear his kilt. Elegant yet masculine. During one of these pre-business-trip ceremonies, when I was about eight, my mom walked in. I looked at my dad’s stuff and asked, “How come dad is so rich, and we’re so poor?”
My dad loves this story and laughs out loud when he tells it. But it wasn’t funny. He’s been married – and divorced – four times. There was some financial stress, there was incompatibility. But the real fissure was that there were two Americas … under one roof.
Whether we’re executives, parents, or citizens, we need to ask ourselves: Have our interests diverged from those of the people who matter most to us and society? Do our spouses, children, neighbors, employees, and countrymen win and lose in reasonable harmony? Are we part of a family, part of a nation? Or have we become the MeWork generation?
Masayoshi Son is Japan’s second-richest person, with a net worth of more than $30 billion.
Reuters/Issei Kato
Billionaire SoftBank founder Masayoshi Son has joined calls to cancel the Tokyo Olympics.
“Currently more than 80% of people want the Olympics to be postponed or canceled. On what authority is it being forced through?” Son wrote on Twitter on Saturday.
Tokyo and other parts of Japan are still under a state of emergency amid a new COVID-19 wave.
Billionaire SoftBank founder Masayoshi Son has joined growing calls to cancel the Tokyo Olympics as Japan struggles with a new coronavirus surge and many parts of the country remain under a state of emergency.
“Currently more than 80% of people want the Olympics to be postponed or canceled. Who and on what authority is it being forced through?” Son wrote on Twitter in Japanese on Saturday.
The day after his first tweet, the billionaire investor wrote: “There’s talk of a huge penalty (if the Games are canceled), but if 100,000 people from 200 countries descend on vaccine-laggard Japan and the mutant variant spreads, I think we could lose a lot more: Lives, the burden of subsidies if a state of emergency is called, a fall in gross domestic product, and the public’s patience.”
It’s still unclear just how many people will be at the Tokyo Olympics, where about 11,000 athletes are expected to compete. In March, the Japanese government decided to ban foreign spectators from attending the Games due to the emergence of new COVID-19 variants. As for local fans, the organizing committee has not announced how many spectators will be allowed to attend the Games, though it previously said it was considering capping capacity at 50%. Son did not immediately reply to Insider’s request for clarification on the 100,000 number mentioned in his tweet.
Son’s remarks came after International Olympic Committee Vice President John Coates said at an online news conference on Friday that the Games would “absolutely” go ahead even if Japan were under a state of emergency.
A protest against the Olympics on May 9, 2021 in Tokyo, Japan. With less than three months remaining until the Tokyo 2020 Olympics, concern continues to linger in Japan over the feasibility of hosting such a huge event during the COVID-19 pandemic.
Yuichi Yamazaki/Getty Images
The SoftBank CEO’s voice joins growing calls to halt the Olympics as Japan struggles to keep its coronavirus outbreak under control. A poll last week found that more than 80% of Japanese residents want the Olympics to be canceled. In the same week, a group of 6,000 Japanese doctors wrote an open letter to Prime Minister Yoshihide Suga saying that Japan’s healthcare system could be overwhelmed if the Games are held as scheduled. Many have taken to the streets to protest the Games going ahead.
