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Commence disruption: Bezos, Buffett, and Dimon are getting into healthcare
It was only a matter of time until Amazon tried their hand at one of, if not the most, complicated industries on the planet.
And now it’s happening: Jeff Bezos is teaming up with a real nerd herd of corporate kings in Berkshire Hathaway and JPMorgan to launch an independent healthcare company, aimed at providing cheaper coverage to their nearly 1m collective US employees.
The move is already a major headache for traditional US healthcare providers (within the first 2 hours of the announcement, the market value of 10 large health insurance and pharmacy stocks dropped by a combined $30B).
Just beggin’ to be disrupted
With the rise of corporate healthcare costs, the industry has been askin’ for a shake-up over the last few years.
The total cost of healthcare per worker for employers has risen nearly 3% this year (its 6th consecutive year of small upticks), in return pushing up the costs for what employees have to pay out of pocket.
Problem is, healthcare costs have risen faster than wages and inflation. That means premiums for employer-provided insurance plans have shot up 19%, while employee pay has increased only 12%.
Now the bigwigs are stepping in
Warren Buffett called the rapid rise in healthcare costs a “hungry tapeworm on the American economy,” while Bezos explained fixing the healthcare industry will require “talented experts” and a “beginner’s mind.”
Sure, cutting healthcare costs for their employees means cutting costs for themselves, so it’s not all pure intentions from Bezos and the gang.
But, when 3 of titans of corporate America make a move like this, people listen -- and if Bezos and co’s personal cost-cutting interests happen to benefit 950k people between the 3 companies worldwide, then good on them.
The million dollar question: can they do it?
There are (justifiably so) a ton of skeptics. Their actual plan to carry out this daunting task remains endlessly vague, leaving many people wondering what the h*ll any of this actually means.
Will Amazon hospitals soon be a thing? Are we going to start picking up medicine at Whole Foods? Is Jeff Bezos a nicer Lex Luthor? Stay tuned.
So many questions...
Doggy king, Wag, raises $300m from SoftBank
Put down your leashes, because the dog-walking startup Wag has raised $300m from SoftBank Vision Fund.
This investment marks yet another expensive deal from ol’ Softy (honestly, at this point, their cash flow seems truly endless), and it makes them a 45% owner in the pup-care business.
It also gives them a ton of control in the process
Being behind the entire deal reportedly gives SoftBank an “enormous” influence over at Wag. Exhibit A: the fact that the deal hinged on Wag’s assurance to SoftBank that they would find a new, more seasoned CEO.
With two shakes of a dog’s hind legs, Wag canned their co-founder Josh Viner and brought on former LifeLock CEO Hilary Schneider as their new chief executive (though, the Viner family claims the two developments had “nothing to do” with each other).
Why all this for a dog-walking company?
When asked what what he sees in Wag, one of SoftBank’s senior investors said “Wag is a clear leader in the rapidly growing global market for pet care services.”
If there’s a large-scale AI undertaking in the works, it’s likely that Andrew Ng has had a hand in it.
To put it in Ocean’s Eleven terms, he’s the go-to “greaseman” for big tech companies looking to solve some of the biggest questions in AI. AKA, he can weasel his way around any deep learning obstacle out there.
In Ng’s words, investors are so eager to get a piece of the AI action that “our fundraising process was very painless.”
(His track record as the chief scientist at Chinese internet giant Baidu, and creator of Google’s deep learning project, Google Brain, probably didn’t hurt, either…)
Now, Ng has big guns like NEA, Sequoia, Greylock, and (of course) SoftBank on board -- all attracted by his promise that AI businesses are “more repeatable than people think,” and that he can build them faster than anyone.
To that end, the fund will operate more as an incubator for Ng’s projects, rather than an investing arm for outside startups.
Ng’s been grooming the talent -- now he has the resources to recruit
Ng’s already launched Deeplearning.ai, an online curriculum of classes on things like “deep neural networks” to fill the shortage of AI engineers, which has made it notoriously difficult to get deep learning startups off the ground.
But, niche engineers don’t come cheap -- and with this extra funding, he’ll actually be able to pay their $500k salaries.
A series in which The Hustle explains things in the tech and business world that don’t seem to make a whole lot of sense.
What the hell is the $1 CEO salary?
In recent decades, a curious trend has emerged: dozens of top tech CEOs -- including the likes of Larry Page (Alphabet, Inc.), Mark Zuckerberg (Facebook) and Jeremy Stoppelman (Yelp) -- have slashed their salary to a measly $1.
The $1 CEO salary is often held as a shining example of the “spirit of sacrifice” in business: a company-first decision that aligns a leader’s interests with those of his or her corporation.
But data tells us another story. Here’s the GIF to break it down (share it with the people who need to know here):