Transcript: Deep Health Tech: Why 'Dreams' No Longer Get Funded — and How to Build a Healthcare Startup Investors Want

Eyal David: [00:00] Hi, this is Eyal. Welcome to Product Builder, the place for the most interesting product conversations. I'm the owner of Userflowzz, and among other things the host of this podcast, and my goal here is for us to improve our product skills together. If this is your first time here, I hope you enjoy it. And if you've already tuned in and gotten value, I'd really love for you to share the podcast with a friend. So come on, let's begin! Hey Talor, how are things? How's it going? What a pleasure to be here. Great, what a pleasure that you came. A rainy day, maybe a bit less than they promised. Okay, so with us is Talor, who is a managing partner at eHealth Ventures — did I say that right? Correct. And you're going to lay out for us a bit about your world, tell us a little about what it looks like there. So I'd love it if you could introduce yourself briefly in a few sentences.

Talor Zaks: [00:54] Okay, gladly. So I'm Talor, not Tahilor as people might think. Today I work — I manage a fund. I work at an investment fund called eHealth Ventures, which I assume we'll talk about most of the time. In my background, before the fund, a combination of computer science, business administration, and coaching. I've been involved in medical technology since 2001, I did it for a few years in Israel, then a few years in the United States, and a few more years in Europe. I saw the big gap, I saw the Israeli advantage, and it connected with my affection

Eyal David: [01:31] for the financial worlds, and that's basically how eHealth Ventures was born. Amazing, can you tell us a bit about the Israeli advantage? What does that actually mean?

Talor Zaks: [01:39] Yes, I'll present it as a story. I worked in Israel, and its main client was Maccabi, and then Leumit, and then many hospitals, and we did all kinds of things here that I didn't realize how advanced they were. Like, for example, in 2001 I helped Maccabi launch Maccabi Online, what we know today as an app, now in the browser. In 2003 we did the telemedicine that transports cardiac tests, from the point of testing to interpretation and back within 20 minutes. And then in 2007-2008 I head out to the United States, to the big world, and I assume we're the backward, lagging ones and they're the smart, big ones, and I go in to see how an American doctor's clinic works, and I discover mountains of paper, and the faxes don't stop beeping, and I realize we're ahead of them by about 20 years.

Eyal David: [02:35] Wait, just to set the scene — so why did you go there? After I worked in Israel both as an entrepreneur and as an employee at a company,

Talor Zaks: [02:44] an opportunity arose — an American company actually approached us and asked for development services, and that's how it all started.

Eyal David: [02:51] And then you started learning about that world there, and surely there's a lot to learn about the industry, so — so you're saying you came across a significant gap, in terms of technology. Technology, yes. What else did you notice? And what exists today? Like, are there still gaps today? First of all, today it's already very well known,

Talor Zaks: [03:10] that the American healthcare system is completely broken. Everyone already acknowledges it, they acknowledge it too, whereas back then they hadn't quite understood it. But it's a healthcare system that pays a lot of money — 4x, 5x the Israeli healthcare system for every procedure, and the results are worse. That's the bottom line, right? You start with the same illness, you finish with more or less the same treatment, and along the way you pay a lot more. And that's a very, very big gap, which creates enormous opportunities, and that's why most of the world's healthcare money goes there.

Eyal David: [03:42] They're simply wasteful. That's it — if I remember correctly, correct me if I'm wrong, but Obamacare was also around that period when you visited, something like that, right? Correct, Obamacare started then, when the goal was to try and bring,

Talor Zaks: [03:57] to make medicine accessible also to the weaker strata, those without insurance, and give them coverage, there was also the trend that still exists, of the Accountable Care Organizations, which try to be an HMO, because an HMO — what's its big advantage? An Israeli HMO, as a model. It's that if you received a budget, and you're responsible, within the budget, for your entire healthcare matter, from A to Z, then the more efficient it is, the better it can manage within the budget; if it's wasteful, it won't be able to provide the service, and there's competition. And that was accountability, which is very much lacking in the American market, because there a doctor wants the best for you, regardless of how much it costs.

Eyal David: [04:38] And a moment before we run ahead, one second to really tell us about the industry, and about an overview we'll do here, but can you tell us what the situation is in Europe, and in general — let's stick to Europe, those are the two markets you know better, right? Yes, Europe is of course not homogeneous,

Talor Zaks: [04:53] there are different countries there, with different systems, and they're not similar to one another; let's take Britain as an example, there it is single-payer in that sense, that there's the NHS, which is a kind of big health fund, that's divided into trusts, and they lack one very significant structure, which is competition. The NHS divides Britain geographically, meaning, you can be in NHS London, or in another NHS — it's called trusts — but there's no competition between them, and the absence of competition makes them not so nimble and eager for battle, to improve and get better, as we see here, and in every country it's a bit different; in Greece, for example, there's a situation I pray we don't reach here, where something like 30-40 percent of the healthcare system is completely private, meaning, the public healthcare system serves the weak, and the private healthcare system serves the upper middle class and up, and I'm hopeful we won't get there. I think in Germany and France it surely looks completely different, no? Yes, Germany is built on health funds, many health funds; by the way, the Israeli model, at its base, is German — it's the Bismarckian model — because I'm taking you here into lessons, on the structure of healthcare systems around the world, but historically, the Israeli healthcare system resembles, it's built on principles that came from Germany, of the health fund in general, only there there aren't four health funds, there are 70 health funds. And again, it varies from country to country; broadly, as a rule you can say that Europe is more based on public medicine, state-owned, or nonprofits operating on behalf of the state, compared to the American system, which is almost entirely private, which is also a lie, because a significant part of that system is the Medicare system, where there's a public system, for those 60-plus, the pensioners. But it is completely private, in terms of service providers. So that's the main difference. What maybe isn't a difference, is that in both these regions,

Eyal David: [06:59] the population is aging, right? Also the countries we mentioned, in Europe and also in the United States. All over the world, yes. So maybe let's talk for a second — bring us into your world for a moment, maybe describe for us what kind of companies you're actually looking for in the fund,

Talor Zaks: [07:14] what you're used to working with, and maybe take us from there. Okay. So first of all, we're under the heading, that's called today Health Tech. The names change. We once called it Digital Health, or e-Health even before that, hence the name. Health Tech means that we invest in medical technology that is not drugs, and is not,

Eyal David: [07:39] to a certain extent, wet biology. Maybe give an example, to set the scene, of something you dealt with in the past?

Talor Zaks: [07:47] I can give quite a few examples. At the level of things that are completely Non-Medical Devices, there's a company like Qlog, that does optimization of processes within the healthcare system, in hospitals, in health funds. At a relatively very wet level, there's a young company, that we invested in quite recently, called 2DX, that knows how to do, or claims to do, home testing, for STDs. Which saves the embarrassment of going and asking the doctor, or the doctor sending you to a lab. In the middle, there are fascinating topics, like a company called Identify, that computationally knows how to take the blood of a pregnant mother, in the sixth week, and extract from there the equivalent of a full genetic sequencing of the fetus. And then in weeks six to ten, you can actually get a full status picture, that saves all the other tests, like NIPT, and amniocentesis afterward, and so on, and it's completely computational.

Eyal David: [08:48] I'm dying to ask you, so you don't get pulled away, but let's stick with this for a second, really — so you gave a few examples. So focus us, is this okay, is this the type of companies, the type of products, that you're looking for? At what stage?

Talor Zaks: [09:02] So first of all, we call it Deep Health Tech; we usually touch things that are more clinical, deeper at the technological level. Our stages are early stages, Early Stage, always; until now we focused more, really at the beginning, at the idea stages — we ran an incubator, which finished its chapter, and today we're focused on a slightly more forward stage, which is the execution stages, let's call it, or I like to call it Early Commercial.

Eyal David: [09:32] And so you get, you surely get a lot of offers today, a lot of opportunities landing on you, so how do you handle them, Talor — let's say, what's the situation in the market in general? How much acceptance is there now, for new startups in this field?

Talor Zaks: [09:50] For us, activity continues at full force; we finished '24 as a record year, we did 17 deals, 8 of them new incubator companies, 3 new Early Commercial companies, plus more investments we'll continue in our companies. We find, we continue to receive many inquiries. I don't think we're a fund that's representative of the market, right, over the last year or two most investors are more withdrawn, and keep their money to support their existing portfolio, and tend less to invest in new ventures. A tough period, we'll surely talk about it.

Eyal David: [10:30] We'll talk later, tell me — in what areas do you know best how to help portfolio companies? Does that come more from you? We try to give,

Talor Zaks: [10:37] it's a very broad support team. I should mention what I maybe didn't say, but eHealth Ventures is a partnership. It's not me and the team working alone in a vacuum, we're backed by very, very strong partners; the central partner is the Maccabi Healthcare Services group, alongside them our strong business partners, that's Mayo Clinic from the US, we have investors like the pharmaceutical company Amgen, Medison Pharma in Israel, the Malam group, and more and more investors — investors from China, from central Europe, from the US — and we work very, very hard, so that the names I listed won't be decoration on the wall, but really deliver value. And that means, for example, that every two weeks there's a call with Mayo Clinic, we go over the deal flow, and go over the portfolio, how we can help them with what they see interest in, what they can support, how they see the technology, as representatives of the American healthcare system, as much as possible — and the results are beautiful. Just for example, Mayo Clinic invested alongside us in three of our companies, and entered co-development agreements with three of our companies; the Maccabi group runs pilots, and clinical trials,

Eyal David: [11:55] I don't know, with about twenty companies, or something like that. Yeah, what did they do? Can this be seen at Maccabi? Or was this recent?

Talor Zaks: [12:01] Is it like that? I mentioned Qlog earlier — so it works at Maccabi, in all the clinics, present behind the scenes. We had a company that did a remote dermatology project, which operated at Maccabi and elsewhere,

Eyal David: [12:16] and there are constantly trials and pilots happening all the time. And tell me, in this industry — I'm pausing, opening a parenthesis about this industry — there are also all kinds of dynamics; are there some interesting facts about the market that you can mention? Look, the American market,

Talor Zaks: [12:29] if you asked about it specifically — and we're here, this audience is product people, right? So let's talk about that for a moment. I remember I sat down there, and just sat in the clinics. I observed. For a long time. Is that what you did in 2007-2008? Yes, yes. I sat in the clinics. The same startup we worked for was trying to develop the medical record — the first, most advanced web-based one — based on Israeli knowledge, and bring it to the Americans. And... you can't assume that what works here will work there tomorrow morning. Because the system works differently. So I just sat there and observed. How did they let you sit there? Who allowed it? What did it even look like? We asked. Okay. We asked. There were of course Americans on the team, who knew how to ask for it with the accent, right? By the way, I have a funny story about that too. And I just sat there, and observed, and asked innocent questions. Very basic product work, right? Just don't assume you know — sit and watch, and also the client doesn't always know. He doesn't know what could be done differently. He knows how he works. So let's observe it, and from there we'll learn. And I'll give you two examples, which don't necessarily exist today anymore, but they do represent the gap in perception. One example: I noticed that clinic visits are very long. First of all, an American family doctor is a completely different operation from an Israeli family doctor. We're familiar with a doctor sitting alone in a room; at best, there's some medical secretary, who's outside and helps five doctors simultaneously. An American doctor is a one-doctor office, that has two reception clerks, two nurses, the lab on-site, and you come in, you start filling out forms, you sit in the waiting room, you go into the exam room, the nurse comes in, takes vitals, asks what the problem is, the nurse leaves, the doctor comes in, he looks at the vitals, looks at the problem, decides on the treatment, whether to write a prescription or not, leaves, the nurse comes back, if blood needs to be drawn she draws blood on-site, and so on and so forth, and you won't leave there in less than 45 minutes.

Eyal David: [14:48] And it looks very inefficient. It looks really... it reminds me of the army, just a hint, but okay. Okay, there just for effect.

Talor Zaks: [14:56] The immediate reaction is: let's show you the process, we can shorten your time to fifteen minutes, you'll save a ton of money. Oh boy, oh boy. If you ask, before you act, you understand that their ability to collect the payment for the visit is very dependent on the visit time, on the duration of the visit. There are four tiers of billing, of the price you can charge from the insurer. And the most significant factor for moving from tier to tier is the duration of the exam, and the maximum is 45 minutes or 50 minutes. There won't be a visit longer than that. Which is a dynamic that, from afar, as an Israeli entrepreneur, would probably be very hard for me to put my finger on. Yes, you'd just look at it and be astonished by the inefficiency, and say what idiots, and in the end we always look for the money. The reason is in the money.

Eyal David: [15:44] So you said two examples — I won't clip your wings — what was the second example? The second example: I'm sitting there,

Talor Zaks: [15:50] and I see that the doctor sent the patient to do a blood test. And the result comes back not to the patient, but to the clinic. We're talking — I'm talking to you about 2007-2008 — and if everything's fine, they send the patient a postcard home, they send them [saying] everything's fine. And if not everything's fine, then they call and invite the patient in for another visit. What's the interest here, keeping the phone line busy for a call? What's the interest? The interest is terribly simple. I asked the doctor, why do you do this? So she explains, she says, if I send him the full results, he'll call me and pester me endlessly, and I don't have time for him. And if needed, then let him come, and then I'll get paid for another visit. On the phone I don't get paid.

Eyal David: [16:36] That's very logical. Again, economically. So if for a moment we look — I'm actually looking at what's happening in the world now, okay? We came out of a pandemic, actually 2021, a tough one where a lot of money was thrown into this industry, a lot of things started running, a lot of investments. We were at the tail end of the epidemic in '22. Where are we now? Where, what trends are there today in this world? The focus is, it seems to me, like you talked about before, around efficiency, streamlining processes, things like that — there's hype now out there. What does it look like today? Is it a buzzword? What are the trends in this industry?

Talor Zaks: [17:11] I'll talk about the investors' trends, okay? In '21, following Corona, there were tons and tons of investments, tons of money was thrown, billions, on dreams and promises, that the world is changing, that we moved to remote medicine, and everything becomes technological and seamless, and the disappointment was bitter. Tons of companies wrote off billions. Just look at the stock markets, right? Companies like American Well, which we love a lot, because they're Israeli, dropped, I don't know, 95-97% from the IPO by today. Can you tell a bit about what they do, because I really don't know them. They do very smart telemedicine. Very, very smart. A super impressive company, wonderful people, amazing technology. They raised a billion dollars, at a valuation of five billion or something like that, to do real remote medicine, in the United States. And the stock dropped, I don't know if it's 95% or 97% from the IPO. And the product — a company out there — works, the company works, brings in money, a good company, it's not even, it's not some failure. It's just that the market got cold feet. It's just that the market priced these companies, in 2021, at imaginary valuations that have no justification. And today, even a very good company — I think it's very good — like American Well, suffers a lot from what happened, and we, as people dealing with early stage, suffer from the same shock waves. Okay, so tell us about our challenges. And I keep saying: there's no more investing in dreams. It's over. Don't come to me with a dream. Come with a business. Investors want to see a working business, investors want to see a fast Return on Investment. Don't come now [saying], if I develop a technology that's unique enough, and strong enough, then within ten years they'll buy me for a billion dollars. But how do you do that, in your world? You need funding, knowledge, momentum. You need to get feedback. How is it possible? Very hard. Very, very hard. And the wisdom is first of all — and we're talking here about product management, right? — so learn the market. Understand who the client is. Understand who the paying party is. It's very complex in the world of medicine. Do you want to really expand on this? The paying party.

Eyal David: [19:26] Because in my head, okay, it's a market where either the consumer pays you, or it's some business that holds it, which is selling to businesses. But there are a lot of hands intervening here, right? There's the patient, and there's the doctor —

Talor Zaks: [19:39] what does this system actually look like? We all know it, we just don't think about it. Okay? Take the simplest example, a pill. A simple antibiotic, okay? And let's think, who decides, who uses, who purchases, and who pays. Come on. Okay? So we have a patient, let's take a child, okay? who's sick, and they take him to a doctor, a doctor. So, first of all, the doctor diagnoses, and decides that there needs to be an antibiotic, and he chooses which antibiotic to give. The health fund, which is the paying party, limits him. It says, if there's a generic drug, then prescribe the generic drug, because it's much cheaper — sorry to whoever doesn't understand — and sometimes the doctor insists on giving the more expensive drug, the ethical drug, or the original drug, and there's a process here that someone needs to manage, right? So the child is the user, the ones who decide are the parent and the doctor, the one who sells is the pharmaceutical company, and the one who pays is the insurance company — the health fund in the Israeli case. Same thing in any medical technology. It's never, or almost never, the consumer who pays. It will always be at least a triangle, where we have a consumer, we have the one who decides, and there's the one who pays. And it's terribly, terribly complex. You need to understand how decisions are made, how the money flows, who makes the decisions. How do you even get what's called a reimbursement code — so the insurance company agrees to pay for your product. It's a complex process, and more than that, many times people say, I have a reimbursement code, so everything's fine, I'm riding the wave. No. You have a reimbursement code — it means the insurance company recognizes you, it still doesn't mean it agrees to pay. And even if it does agree to pay, it still doesn't mean there are no cheaper alternatives, that the doctor decided to give. Or more attractive ones, or ones he has more of an interest in. We're in a jungle here.

Eyal David: [21:40] You gave the example of a pill, so that's probably the hardest, hardest example to execute, right? But if it's just software, one kind or another, it's not... to take such an example, right? So how hard is it actually? So let's talk about, okay,

Talor Zaks: [21:55] about the software that now knows how to do genetic sequencing of a fetus. Okay, fine. So here, let's take this as an example, and I'll bring in things here completely off the top of my head — I'm not revealing any private information. So first of all I'll ask you, what exists today? Good question. So today there's amniocentesis, and there's NIPT, which is the most advanced, and NIPT — there are places where, in Israel now it's entering the health basket, just now, and until now it was private payment. Meaning, the doctor had to recommend, dear mother, there's such a test, and it's recommended, because it [detects] all kinds of things, but it costs 5,000 shekels. And then the mother decides whether she wants it or not. Now comes a company that says, I know how to do it better than NIPT, and I want to get it into the health basket. How do you make that happen? Because the fact that the mother pays out of pocket means there's 20% of the market that will pay for it in Israel, because we're tightfisted. Look, if you think for a second about where the money is, right? If the state has some interest in getting on board with this thing, you can explore that; I don't know if in the United States that's the case, I don't think so. In the United States there's the CMS, which is the Center for Medicare and Medicaid, which is basically the big public insurer, that insures the elderly, it doesn't insure pregnant women. Let's say for the sake of the example, yes, okay, that there's some entity that... but they're the ones who set the reimbursement code. And they say, we recognize the need for this technology, and they're willing to pay for it. Okay, another example: we have a company that develops the ability, from a simple ECG test, to know whether there's narrowing in the heart's arteries, yes or no. That's revolutionary. Today you have no simple way to know this, except a virtual catheterization, which is a complex and expensive test, but there is a cardiac echo and stress test,

Eyal David: [23:48] that gives some indication, much less accurate. And then you say that everything clings to the world of ROI, in the eyes of these bodies.

Talor Zaks: [23:55] First prove that you're really accurate, and really efficient. Pass this barrier of the FDA, for that matter. After you've proven this, then let's find why it's worth it for the insurance company to pay for this more, or instead of, or alongside the other technologies that already exist. And then you even say, I need to market it in order to bring to the awareness of the recommender, or the doctor, or whoever it is in this case, that this thing even exists and it's worth their while to recommend it. Right. I got reimbursement codes, meaning, the insurance company is willing to pay for it, but who said the doctor even knows it exists? You're right, you need to market it, so the doctor who decides will know that this option exists. Wow.

Eyal David: [24:37] And where does this even catch on in terms of trends in the world now? We went to where the money is, and that makes sense. But in terms of trends in the world,

Talor Zaks: [24:46] what does it look like? So I started to say that the trends today are — look — businesses. That know how to sell, and with that you'll succeed in raising money. If you don't know your market in depth, if you don't know exactly how things work, it'll be very hard for you to raise money. Most American funds today will just tell you that you don't get in the room before you have revenue of two million dollars. So you also need to somehow be able

Eyal David: [25:15] to generate the revenue yourself, in ways... But where in these businesses were there ever profits after so many years of operation?

Talor Zaks: [25:22] It was always, after all, a lot of research and development. Revenue. So I agree with you, but there was tons of research and development, there was tons of depth, so it's not the kind of businesses that are SaaS and I start to be... There are those too. There are such companies too. We have an example of a very, very good company, called Agmon, credit where it's due, Michal Miri the talented CEO, and they use AI to automate processes in imaging institutes. They're not a medical device, they don't need regulation and there's no reimbursement. A software company very similar in nature to regular software companies. So here too, before it passes two million dollars, it won't get an A-Round from an American fund. That sounds like a very good way to enter this market,

Eyal David: [26:11] because like you said, in the end... okay, there are probably much deeper elements of security here, of privacy, but in the end it's a SaaS company. Right. Either way. So I like this direction, you don't need to pass FDA Approval, you don't need anything really. So this is maybe an example that's slightly different, but if I were now going down the path where I need, like you said with the pill for example, where will I reach two mill... like it's much more complicated to raise something like that at an insane level. Right, but it has two sides.

Talor Zaks: [26:42] The more complicated you are, with reimbursement and FDA, the harder it is to compete with you. That's for sure. A SaaS company that does something based on NLP, that started three years ago as something very unique — as time passes, and this time passes very, very fast, the competitive advantage erodes. So it has two sides. So actually until now we've counted a lot of challenges...

Eyal David: [27:05] we talked about the challenge in the industry right now, we talked in general about the challenges of entering the industry. What positive trends can you see now? I think that if I sounded a bit whiny,

Talor Zaks: [27:20] or something... you touched on what's hard, because it really is hard. But there's a very big opportunity here, that's why we're in this market. Let's look from above for a moment at the level of the market's trends.

Eyal David: [27:28] You said earlier, this market is maturing and aging, and there aren't enough medical staff. I published an article about this that talks about how there's even a fairly dramatic drop in life expectancy in recent years in the United States, where we have data. A significant drop in life expectancy, which hasn't happened in the last hundred years. And the question arises, why? So there are the conspiracy lovers who'll say it's because of the Covid vaccine that kills people. The economists will say it's because of lack of access to the healthcare system. And people constantly ask what AI will do, and whether it will replace doctors and so on.

Talor Zaks: [28:10] My answer is, I wish AI would save us. Meaning that through the new technologies we'll be able to make the system efficient enough, that it can reach each and every one of us, no matter what our economic situation. And that's the opportunity that stands before us — there aren't enough medical staff here. In all professions there's always a shortage. The population is aging, living more years, sicker, and technology is the place where everyone looks to find the innovation and what will save us. And you can see endless examples here. Endless. If we know how to act right at the level of precise business models, that understand the value and what the value proposition will be for each of the sides, there are enormous opportunities here for companies worth a lot, a lot of money. And all the companies I listed, each one of them, its potential is infinite.

Eyal David: [29:06] And I assume there's also significance to how much the state itself is willing to absorb AI into the system, right? First of all it sounds very encouraging, what you're saying, but I'll add a question. I think AI has already happened. And the regulators are grappling with how we contain this thing. The FDA is grappling with when and how to give regulation to an AI system that determines a medical diagnosis. But it's already happening. So Talor, can you give us an example maybe between the American healthcare system, the European one and the Israeli one, which in my eyes, I don't know, from what I know, is I think less good in all kinds of aspects. I don't agree with you.

Talor Zaks: [29:49] I think the Israeli healthcare system is considered very, very good, relatively. Of course it's not free of flaws, and there are problems and difficulties and shortages. And if you live in the periphery, you'll get much less good service than if you live in the central area. But you have to remember — let me give you a very simple example. A close family member got sick with cancer. And my American partner, with whom I together founded eHealth Ventures, I told him the bad news. And his first question was, do you need a loan? I answered him, listen, the hospital parking is terribly expensive, but I'll manage with that. And ultimately, she got the best medical service she could have gotten. To our great joy, she also recovered. And we almost didn't pay any money out of pocket. No private insurance, nothing. The accessibility was very high, the quality of medicine was excellent. And there are tons and tons of such examples. Now, we look at this as... taken for granted, we deserve it. But it's not. It's really not taken for granted, we really don't deserve it. If you're in the United States, prepare 200-300 thousand dollars for such an event. If you live in England, prepare for there to be queues. You won't get the service. The quality will be much less good. In England. So all in all, I think, as someone who's been around the world, that with all the troubles and problems we have here, the Israeli healthcare system is overall in good shape. If we look ahead, at where we foresee difficulties — and this the Israeli Ministry of Health published — we are today at an all-time peak in the number of doctors per capita in Israel. And from here we only go down. Why is that? Because we still benefit from the Russian immigration. That we received a gift of very many doctors, who are retiring now. That's it, they gave their share. And there aren't enough doctors to replace them. So in the absolute number of doctors per capita, we're at a peak today, and from here we go down. How will we deal with this? What can be done? So we'll increase, add another university, increase the number of students — that's one part. Another part is, let's find the right technologies, that will make our doctor more efficient, so he can treat the hard cases, and the simple cases we'll handle with machines. That's the key in my eyes. Because the peak we're at in terms of resources won't return. And that's also what you describe,

Eyal David: [32:18] you also described the United States as much tougher. There's also the matter of cost-effectiveness, let's say, if we go after the money, then how do you see this? So it'll probably be much cheaper for them to produce these analyses. Right? Compared to a human doctor, and compared to a human doctor who's actually not efficient,

Talor Zaks: [32:34] as with such and such technologies. Yeah, you went to surgeries, I'm not going to surgeries. I just went to surgeries, sorry. Let's see which hospitalizations can be converted to home hospitalizations. Which hospitalizations can be converted to community treatment. What preventive medicine can be done. If I — we have technologies today, by the way, two companies that know how to identify flare-ups of diseases, one in the field of lung disease, of CHF, and one in the field of autoimmune diseases, like Crohn's and colitis, that will prevent the flare-up because it will identify that it's coming. And if we identify that it's coming, then we can do the intervention before hospitalization, and save both suffering and a lot of money. So these are examples of technologies that can change the world from the economic side specifically. What you keep aiming at

Eyal David: [33:21] is that more SaaS solutions, more process solutions, more solutions that are still before the FDA, right? What I described now is completely clinical.

Talor Zaks: [33:27] Clinical solutions that know how to give a diagnosis — I'll give you an example. The company that deals with IBD, Crohn's, colitis, autoimmune diseases of people who are sensitive in the areas of the digestive system. And they sometimes get thrown into an inflammatory storm in the body, that makes them feel very bad and get hospitalized, and heaven forbid also deteriorate. If you know it's coming, you can do something to prevent this deterioration. And that's the new technology being developed at our place, that will alert you 24 hours before, that here it's coming. A similar technology will alert you 24 hours before, [that] the migraine is on the way. So relax. Cool, I think it's very interesting,

Eyal David: [34:11] and I'm sure people have a lot of questions; afterward we'll leave details, and maybe also, if you want to add a link to the article you mentioned, then we can add it to the show notes too. So, because you see tons of companies, and I'm very curious about this, what in your eyes are the most important product skills for a product manager in this field? I think that in general in our industry there's a significant lack

Talor Zaks: [34:35] of product management capabilities. The entrepreneurs usually aren't so aware of it, not so aware of the importance of methodical product management from day one. And it's critical, because I said it, today you can't invest in dreams, you have to come with a proven business model, validated, as we say, that you tested, that you talked with your clients, that you know exactly where your value proposition is. And in my eyes that's product work, par excellence — there's no one else here who'll do it. You need product people with a systematic methodology, that returns, asks, examines, learns, and comes back with new questions, in order to distill the value proposition and the business model. And here there's no magic. The one difference is that you need to not rely on common sense, and that's — I gave the example earlier. We need to know that we don't know, and to ask questions that are sometimes a bit stupid, because this system thinks in a non-intuitive way.

Eyal David: [35:32] So I assume that at companies at the beginning of the road, the CEO or the entrepreneur is actually leading the product, like SaaS companies for that matter. At what stage is it right to bring in a product manager, and how do you perhaps guide your portfolio companies,

Talor Zaks: [35:46] what does it look like? Very right. Usually the product manager, who isn't called that, is the CEO of the company, usually they're the content experts, who understand the clients best. The difficulty in this approach is that it's usually intuitive, and not systematic, and there's no methodology here. And on the other hand, you can't bring in someone whose entire occupation this is, before there's enough money. So it's the usual chicken and egg that we live with. Our goal, as a fund, as investors and as mentors, for those companies we invest in, is at the stages where it's still just the CEO, to encourage him to think in a more systematic way about the whole matter of product management. And the moment the financial option opens up, then to encourage bringing in this figure, as a title, as fast as possible. That's my opinion at least. So how do you enter this field,

Eyal David: [36:40] if I'm a product manager, or product managers who want to enter the field? It's also complex, because if you studied general product management,

Talor Zaks: [36:47] I'll always ask you, what do you know about medicine? And what do you know about the medical market?

Eyal David: [36:52] Theoretically I could start following you, and accumulate tons of content. I could build case studies in ChatGPT, I don't know. Yeah, but we don't really believe

Talor Zaks: [37:00] [in] 'I read and learned on my own' — it's hard for us to believe it, although talented people are definitely capable of learning on their own. And we want to see experience. And here too the way is maybe to start at bigger companies, in more junior roles, and for a startup to rely on you as its product manager, you have to come with experience, because there's no one else beside you. There's no one to support you. So maybe if it's a first step, it's worth starting at bigger companies, and then making the transition to a startup, where you're the main player. Really, maybe another option too,

Eyal David: [37:29] is like the example of the SaaS company you mentioned, that you can maybe enter there, if they're currently raising, and you can ostensibly look for it, but it could be a good way to actually enter the industry. Also, there are companies of course,

Talor Zaks: [37:45] the more SaaS-y and less clinical they are, the less significant the specific clinical background is, but it's still an industry that, as I said, thinks a bit differently. Okay, Talor, so after this whole journey

Eyal David: [37:58] we went through, is there some summary point, or how do you foresee the future from here? Ah, I think that we need

Talor Zaks: [38:04] to create the light. We're after two very hard years in the industry, with very little money available — we talked about it at the beginning. The foreign investors mostly avoid investing in Israel. And the question arises, what do you do? And how can this be overcome? So first of all, I think that at the level of the macro trend, we hit bottom, and I foresee that this year we'll start to see good and positive movement, and more investors will return to invest in Israel. But, despite all the avoidance by investors of investing in Israel, they still mostly like to invest in Israelis. The Startup Nation, the sex appeal, exists strongly, and the investors want this thing, want this product called an Israeli startup. One of the things we do is to package the startups right — that is, the flip, that we once used to do late, toward IPOs and mergers, today we suggest doing it much earlier, and then enable those foreign investors to invest in Israelis, and not necessarily in Israel. By the way, the Innovation Authority too, the Israeli one, understands this problem and supports it, and today knows how to give the grants it gives to the parent company after you've done the flip. So, to summarize, I think we hit the bottom of the difficulty, and from here things will look a bit better, but that doesn't remove from us the responsibility to package this product called a startup in a way that will be the most convenient for our investor to buy it. Okay, great.

Eyal David: [39:35] So I'm very happy to hear that. So it was a good episode in my opinion, and... how does one get in touch with you? If people want

Talor Zaks: [39:43] to just ask about the industry, want to... our website, ehv.health, I'd be happy to talk.

Eyal David: [39:50] On LinkedIn too? Yes, on LinkedIn, I'm available. Wonderful, what a pleasure that you came. It was really fun. Thank you. And we'll talk later, we'll be happy to hear in another year that the situation has turned around. Thank you very much. Bye. Hey friends, thanks for listening. If you found this podcast valuable, you can subscribe, follow us, of course, for more episodes on Spotify, Apple Podcasts or any other app. Of course, if you didn't find us on some app, I'd be happy for you to write to us. We'd be very happy for five stars on any platform, and for you to follow us, so that more listeners can be exposed to us and find the podcast. You can also find the previous episodes on any app or on the YouTube channel, we have links in the description. Until next time, come on, be efficient and bye bye.