At a fundamental level, business and capitalism are pretty straightforward: You have a product or service that someone wants, and someone else has something you want. Trading products and services makes both of you better off.
Of course, you could just barter the products and services directly, but it’s easier to have a common form of accounting to smooth things over in the form of a currency.
This makes the process of trading more efficient because it turns the act of trading into a single variable. Instead of every transaction involving two variables (a product / service on each side that must match the interests of each party), it turns it into a single variable (a product / service on one side only and always a common currency on the other side).
With the invention of money / currency, business and capitalism becomes a pretty simple optimization problem: Creating the products and services that people value most.
How do you know what people value most? It’s usually (but not always) what people will pay the most for.
And increasingly, society is paying an ever expanding share of wallet, either directly or indirectly, to tech companies.
From the tech industry’s perspective, there are a couple of obvious choices for continued growth:
1/ Keep finding new customers (which at this point is mostly international or very young or very old consumers),
2/ Get existing customers to buy existing products and services more frequently,
3/ Expand into new products and services,
4/ Raise prices.
The tech industry is executing on all of these, but it’s really the third and fourth options that strike fear into not only companies that may be disrupted but also society.
Although there are reasons to be worried about the growing power and centrality of tech, generally tech companies are great at what they do!
Most tech companies have gotten to where they are by being great at what they do and by being better than alternatives. Nobody has gotten to where they are by being bad at what they do. And, for the most part, being better also means being cheaper.
So if you put all of that together, tech is still very much a positive outcome for society. It hasn’t been positive for everyone, no. But it’s certainly positive overall.
Last year during the depths of COVID and near the point of maximum uncertainty, Capital Flywheels took a risk to argue that…things were fine!
And if you suspended fear for a second and put on the rose-colored glasses like I did and squinted, you might’ve also seen reasons to be optimistic: Society was restructuring around tech and tech, more than any other industry, has the most aligned incentives with consumers.
What has allowed tech to infiltrate so much of our society is simply because tech is paying more attention to what people want. They are paying more attention to their customers (sometimes their customers are not necessarily the same as their users, which creates conflicts of interest…but that’s a different discussion for a different post), something that a lot of old industries and incumbents have forgotten how to do. Of course we can debate whether what people want is healthy…but tech is winning because it gives people what they want.
Which brings me to the actual topic of this post: Healthcare.
It’s probably not news to you at this point that tech is interested in healthcare.
Apple has Apple Watch.
Google has Verily and Calico (a company focused on life extension).
Amazon has…a lot of stuff…ranging from drug delivery to telemedicine and even some exploratory efforts around health insurance / services.
From the outside, this may look like just another case of tech trying to expand into other areas to keep the financial gravy train going. Healthcare is expensive…so it would make sense for tech to get into it if they want to make a lot of money.
BUT I think there’s more to it.
Although there is a lot of money in healthcare, tech doesn’t seem to have much interest in the areas that actually generate a lot of revenues at the moment. These would be areas like drug discovery and urgent care services.
In fact, tech seems to be interested in the areas where the traditional healthcare system has shied away from – preventative healthcare.
This is interesting because it says a lot about the differences in philosophy and goes to the heart of why tech is winning almost everywhere. The traditional healthcare system shies away from preventative healthcare because there’s less money there than in treating the real gnarly problems that everyone has to deal with when near Death’s door. There’s nothing personal about it…traditional healthcare companies understand that their customers are not people but actually dying people.
Preventative care, on the other hand, reduces the addressable market for the traditional healthcare system.
This would be fine if they could make just as much money preventing disease as compared to managing a disease you already have (the most profitable ones are the chronic diseases since that’s the healthcare version of a “XaaS subscription” like diabetes).
But they don’t.
So why is tech interested in this if they aren’t really going after the “gold mines” in this industry?
One possible explanation is that their interests are aligned with their users / customers!
One of the most fantastic businesses / business models to ever exist is tobacco. Tobacco companies give people what they want. Just like tech. And when people smoke, they really want to smoke! Just like tech. But as fantastic as this business is, it could never escape the fact that the product shortens the lifespan of its consumers.
The more people smoke, the shorter the runway for profits. God knows tobacco companies would LOVE to be able to help their customers live longer so that they can buy more tobacco, but that’s just not how the products work.
Tech doesn’t really have this problem.
But the dynamics are almost the same! I can’t tell you if tech companies look at the world exactly like how I am laying it out, but wouldn’t it make sense for tech to get into healthcare (especially preventative healthcare) because it helps their best customers live longer?
Somewhere down the line, tech will have absorbed all of our wallet and will have absorbed almost every industry that matters.
Somewhere in this future, everyone on earth will already be a customer.
By then, the way you increase the profit runway would naturally be by extending the life of the consumers.
Big tobacco knew this but couldn’t act on it.
But big tech can.
Alignment of interests.
I would say this sounds kind of dystopian if I didn’t know how much we all love our tech. Maybe living to 150 and being able to watch 50 more years of TikTok is exactly what people want?
If people want cake, let them have cake 🍰!