We're all worthy of healthcare that works because we're more than patients, we're people. I'm Paul Marovich and this is the Worthy Podcast where we talk honestly about what's broken in healthcare and how together we can fix it. I could spend the entire podcast introducing John Doerr and not do his career justice. So, I apologize in advance for introducing such a great yet humble man in so few words. After graduating from Rice University with a master's degree in electrical engineering, John began his career working for Intel Corporation in the 1970s. He went back to school to get an MBA from Harvard and then in 1980 joined the venture capital firm Kleiner Perkins where he has been instrumental in funding and guiding some of the most successful technology companies ever including Amazon and Google where he famously led Kleiner Perkins' $12.5 million investment in 1999. Somehow in his spare time, John has managed to write several books including Speed and Scale and Measure What Matters in which he explains the power of using a framework called objectives and key results or simply OKRs to drive outstanding performance for businesses, governments, and nonprofits alike. Perhaps it is not surprising after making early investments in some of the country's most valuable companies that John and his wife Ann have accumulated substantial wealth. And it is definitely not surprising, at least to me, that they have chosen to give a lot of that away. This includes a $1.1 billion donation to Stanford in 2022 to establish the Stanford Doerr School of Sustainability dedicated to finding solutions to the world's climate crisis. John continues to invest in early-stage companies including recently making investments in healthcare technology companies. He's an amazingly generous and insightful host and as a season ticket holder can be often seen watching Golden State Warriors home games. It's my pleasure to welcome John Doerr to our Worthy Podcast. Well, John, thank you so much for doing this and welcome to the Worthy Podcast.
All my thanks to you. I'm humbled by that introduction that you gave me and really think I should be interviewing you. You after all the road scholar and the custodian of the health of 4 million Californians and so I want to be sure that we hear the Worthy community about what you believe.
Well, thank you for that, John. And you can see why I introduced you as a great yet humble leader. I would love to hear more about how it is that you got into investing. What is it that drew you to investing in companies?
Well, I think of what I do as assisting entrepreneurs. And what drew me into it is my father. He's a hero, a role model. And he started several companies with partners, always teams of people to make change happen. Change for the positive in the world we're blessed to live in.
What's your maybe your favorite part about investing? What gives you the most energy?
Well, I think it's to meet an entrepreneur, and entrepreneurs by definition do more than anyone thinks possible with less than anyone thinks possible. More and less. When I meet one of those entrepreneurs who is truly a missionary on a mission that's bigger than themselves, even bigger than their team, it's part of the world that they're trying to serve. That gets me going.
I can see that. So what is it that you in addition to the how are you trying to change the world? What's the mission? What is it that you look for in companies and entrepreneurs that you invest in?
Well, the very best of the entrepreneurs have a vision that's large, not embraced by everyone that they're fighting to create. And then they'll take that vision and be ruthlessly intellectually honest about how to execute on it. I'm reminded of something my mentor Andy Grove once told me. He said, 'Doerr, I don't care what you know. It's what you do that counts.' So he translated that into a mantra that I put into a book honoring him called Measure What Matters. It's his ideas and it's simply that ideas are relatively speaking easy. It's execution that's everything. And we know this about execution. To do almost anything of consequence takes a team. So ideas are easy. Execution's everything. It takes a team to win.
I love that. I can't remember who said this, but the statement's always stuck with me that anything that's created in the world is always done twice. It gets imagined in someone's head and then it gets actually physically built in the real world.
And it's that second part that's devilishly difficult, I think, especially for companies that are doing something that hasn't been done before. Like you can imagine it in your mind, but figuring out how to actually, as you say, do it is probably the hardest part.
Well, I can imagine that you've learned a lot as you've gone along. You just seem like a lifelong learner to me, constantly curious. What would you highlight as maybe your most valuable lesson over your career and how did you come by it?
We learn more from our failures than our successes. And I think the first thing that I bring to a potential partnership is an attitude that no matter how successful a venture like Amazon or Google or Sun Microsystem looks, if you peel the lid off that can of tomato soup, you're going to find some worms inside there. And so my first question is would I mind getting in trouble with that entrepreneur? Because one way or another we'll hit some tough spots. You want to know that your partner in your mission has high integrity, is ruthlessly intellectually honest, is not in denial about the reality that they're dealing with. And if that's the case, then I think if you can get a good way to agree on the goals and I have a system that I learned from others, you can go beyond the moon. You can accomplish almost anything.
Yeah. I think there was another I don't know who to attribute this to either, but the idea that adversity doesn't create character, it reveals character.
Yes. And so the idea, at least what I think I hear you saying is, I want to know what it's going to be like when the going gets tough. I want to know that I'm going to be able to work with this person and have them, you know, it's one thing to have principles when everything's going well. It's maintaining your principles when there's serious risk, maybe even existential risk. That you really find out about people. Back to what inspires me and the lessons that I've learned.
My dad loved people and the part of the venture capital business that I love is the people part. I'm a technologist. I like to know how all these technologies work but in the end the magic is in the team.
So what drew you into like you've been more recently doing a lot more in healthcare, getting really active in it and passionate about it and I'm wondering what drew you to the healthcare industry.
Well the origins of it are again in my family. My brother Tom Doerr was a superb PCP in the St. Louis area where we grew up and he was in a private practice in St. Louis called me up one day and said, 'John, our big national insurer is about to triple the reinsurance rates for our partnership, and that'll drive us out of business. Would you back me and other physicians in starting a health care plan, an insurance business that would be patient oriented, founded by physicians and at least partly run by physicians?' And I thought about this, not for very long. I said, I know nothing about that industry. No, I won't. It's regulated.
And I slept on that decision and the next morning called him up and said, 'No, I'm going to back you because you have to back your brother.' And 15 years ago, he started an evidence-based e-prescribing company. I'll come back to that full circle. And they grew it into for a decade a four and a half or five-star rated Medicare Advantage plan serving 66,000 seniors in St. Louis, Missouri. Tom passed away prematurely, but left a reputation for patient first care. All of his patients had his mobile phone number and he just saw a lot of stress in the health care system where it was almost impossible to keep up with all the literature, the burnout that we all see of providers. So that was the start.
Going back to some lessons, I know one of the things that I've observed when I've engaged from my vantage point with some tech entrepreneurs that get into healthcare is that they'll come in with really clear views on how to fix health care and run into some serious challenges. What have you seen in terms of what's worked and hasn't worked with entrepreneurs trying to get into health technology?
So, one of the entrepreneurs I've backed, Jeannie Kim, says that Silicon Valley types think they can tech their way out of a health care problem. And that's naive and wrong both. I think the challenges in the health care system are the most demanding of any segment of our life. I like to say it's the second most screwed up part of our American institutions. The most challenged being public education. But there's an interesting analogy because I think both with public education and the health care system, the payers, the beneficiaries and the providers are not linked in any kind of a functioning economy or system or marketplace. Health care cuts really deep. People die when we don't deliver a solution and a service that's worthy of our parents, our family, our loved ones.
I love the theme that you've chosen not just for your pod but for your life. You've been saying for some time that it's our obligation to produce a system that would be worthy of our loved ones. And we're not doing that today.
Yeah. You talked about gravitating for people with a mission. That's always been mine for a very long time. Seeing a system that's bankrupting and failing us and knowing that because we're all human and mortal that we're going to need it. I'm just incredibly passionate about that mission as you know. You've also as a result of getting more into healthcare and healthcare technology, you've had a chance to see the health care system. What do you look at when you see it? What do you like about it and what do you feel like needs to change in healthcare in America?
I like the passion of the people who have not burned out. I like what AI is going to make it possible for us to do. What I don't like is how complex health care is. The quality of the care we get. If you have cancer, there's no place I want to go for health care more than in the United States of America. We have excellent quality for acute diseases, but I think we're failing to deal with chronic disease. Someone said the health care system we have is the sum of all the policy makers we've elected and that Americans just want the best health care that they think other people's money is going to buy. But it's our own money and our own care that's on the line here.
Yeah. Well, you are, by the way, you're famous for a lot of things, but one of them is your construct of objectives and key results or just OKRs. If you were to give the American health care system some OKRs, what would they be?
Well, that's a big problem. I don't think I've seen for the health care system an effort that's worthy of what it deserves. Governor Gavin Newsom convened a two-day offsite at Sunnylands to come up with OKRs that in his view would make California the healthiest state in the nation, which California is not today.
It's not. But he asked me to come and give Andy Grove's course on OKRs to the leaders from the industry that he'd assembled. And this OKR thing is not my idea. It's Andy Grove's system. To divert for just a moment, the best way to think about it is to look at Grove's background. So Grove was an immigrant from Hungary who came to the US speaking very little English, went to City University in New York, then came out to Berkeley and taught here and he democratized computing. He made the microprocessor a practical affordable device. He worked at the Shockley transistor lab when they invented it there. But what Grove understood was that to make a chip factory work, thousands of people had to get lines a millionth of a meter, one micron wide, exactly right, or nothing would work at all. And this required in Grove's view a sort of discipline and rigor that meant that you had to get all these people coordinating their activities. So he said let's be really clear about what the objectives are, the what I want to have accomplished, and then the key results. That's how I'm going to get it done. Objectives and key results. What and how. If I go back to Gavin Newsom, he went into that offsite with a great deal of skepticism and at the end of that experience, he said, 'I want to establish objectives and key results for every agency in my administration.' He wrote me a note and said, 'Doerr, I was very skeptical about Andy Grove's system.'
Yeah. But when you get that clear and I'll bet you use a goal setting system like that.
We do. Yeah. I mean we don't call it OKRs. It's amazing if you have a clear set of goals how you can get a team to drive for them.
Yeah. We probably could have adopted that language from the start because it's basically a similar structure. But what I talk to people about all the time is define success in quantitative terms. Or in other words, I want math before English. I don't want a whole bunch of explanations before things start. Just want to know what you know, start with something that's objectively measurable that defines whether we've been successful or not. And we do run into this in one of the things we talk about in the most recent Worthy segment is that we have so many quality measures and so many quality report cards and in fact many of those quality measures on clinical quality are inputs. They're not actual health outcomes. And so if everything's important, nothing's important. And one of the things I really like about the system that you write about with OKRs is that it's always a limited set. It's not just one thing, but it's never 20 or 30 things.
Three to five objectives.
Each objective has three to five key results. And it's hard to build the goal setting muscle of your organization.
Yeah. But it'll probably take a year. It usually does to adopt it. But at the end of that year's worth of muscle building, people love setting and sharing goals.
Having a kind of social contract that everybody who succeeds with the system adapts it. They don't just adopt it. They tune it up for their own culture. Their own willingness to take risk. Is a good grade to get all your goals achieved? Well, Sergey Brin of Google would say no. If I get 70% of my goals achieved, then for his taste, you've got the right balance between risk-taking and encouraging outcomes and performance.
Yeah. You got to be accountable for performance, but if it's all you're only just being incremental if you reach every single goal in terms of your aspirations.
One thing we might do for the Worthy community is the leading website which has all the free case studies and stories. It's called whatmatters.com.
You just go there, you'll find a rich set of resources.
Yeah. We have to put that in the show notes. I'd love it. And I will make sure there's a link there for that because the healthcare industry could definitely use it. So, if I gave you a metaphorical magic wand, in addition to having all healthcare related organizations adopt OKRs or some similar measurement system, what would you use this magic wand to do to improve health care in the United States?
Well, you see, I don't know the answer to that question.
Okay. I'm going to turn it around. If I gave you a magic wand, what would you do to improve health?
