Andy Kessler

Dealbreaker Interview and Excerpt: Healthcare Hedgies

Dealbreaker has an interview and an excerpt from The End of Medicine.
Ex-hedge fund guy Andy Kessler, recently took time to talk to DealBreaker's Carolyn Okomo about his new book, The End of Medicine, a witty, engaging examination of the heathcare industry in the not-too-distant future.

DealBreaker: Finance and technology has sort of always been your thing. In The End of Medicine, you utilize your expertise to analyze the healthcare industry. Was this an easy transition to make?
Andy Kessler: I spent 20 years looking for ever cheaper silicon that could change industries. Over the last few years, I’ve gotten bored. Wi-Fi and Wikis are cool, but a little dull. So I started looking for something else besides computing and telecom and music and stock trading and banking that technology would surround, squeeze, suffocate old business models and reshape in its image. In the meantime, a friend was diagnosed with cancer, only because he banged his head on a mogul skiing and an X-Ray showed a tumor on his neck. And a brother-in-law had a heart attack in the middle of the night. I wondered if there was some technology that could find this stuff early, before it was life threatening. Us baby boomers (I’m a late boomer at 47) are entering that fragile age. So I started following doctors around, cardiologists, radiologists, researchers at cancer centers and universities, looking for silicon.

Read the rest of the interview here.

Excerpt: Healthcare Hedgies

I was eavesdropping on two guys I recognized from the past. One guy used to run some tech money, I think I remember him getting blown out in 2000 for being long and wrong. But he’s obviously still in the business. I strained to read his name tag, without luck. The other guy was a classic popcorn hedgie. Always showing up where the action in, figuring out some angle and trading rapid fire looking for returns.

“For me, it’s just one thing.”

“Market size?”

“Nope, these are all billion dollar markets.”

“Management?”

“Nope, they’re all trying to hit fish with a baseball bat.”

“True. So what is it? Balance sheet? Partners? Their logo?”

“You just play the trials. I don’t give a shit what drug it is, it almost always works the same way.”

“Get out of here.”

“No, check it out. Preclinical is bullshit, you could get gum off the sidewalk to reduce tumor size in rats. So what? Even Phase 1 is a load. They are mostly bent around to get decent enough results so you can get to Phase 2. I’ve tried to time Phase 1 announcements, but no dice. You always wait until you are about a third of the way into Phase 2, then you buy the shit out the stock."

Read the entire excerpt here.

End of Medicine Excerpt: Breakfast at Bucks

This excerpt of The End of Medicine originally ran on GigaOm.

I never turn down a chance for breakfast at Bucks in Woodside. Any place with a motto of ‘Flapjacks and Tomfoolery’ gets my devotion. It’s a daily ritual for venture capitalists - the khaki patrol is out early, snagging the tables and booths with the best views of the room so they can spy who is talking to whom and have something to talk about with their venture partners over lunch.

I come here every so often, but it seems that the same folks – hey, there’s Steve Jurvetson doing another nanotech deal – are here every time I come, almost no exceptions. Over the years, I’ve gotten to know Jamis, the owner, proprietor, and self described Pancake Guy, and he made sure I had a table with a view of the viewers.

“Hey, sorry to be late. Don Listwin,” he said as we shook hands and he slipped into the booth. I could almost hear the gears sputtering and subtle whispers, ‘Hmm, hedge fund guy and networking exec - avert gaze - wireless, maybe, how ‘90’s, nothing of note here. Better to check out that other table with blog index guy and venture stud dripping yolk on each other.’

Excerpt: CT Anxiety

Originally posted on Slashdot
The same technology and silicon and 3D algorithms we play around with every day are about to invade medicine. The following is an excerpt from Andy Kessler's new book, The End of Medicine: How Silicon Valley (and Naked Mice) Will Reboot Your Doctor.

CT Anxiety

I always feel a certain anxiety when I walk into the Hyatt Regency at the bottom of California Avenue in San Francisco. The cutsie Trolley car outside, the Embarcadero tile pattern on the sidewalk — they are all part of the package. But as I've done every time I've been there, I head straight into the lobby, tilt my head back and scan the Escher-like floors, starting at the top and then down and outwards to the bottom until I start feeling dizzy. I thank Mel Brooks for this.

This guy was zooming through someone's brain like it was a Sunday drive. More like a Sunday afternoon video game.

With my head spinning from this "High Anxiety" flashback, I stroll into the conference, half expecting to be given a barium enema by a cross between Nurse Diesel from Mel Brooks' flick and Nurse Ratched from One Flew Over The Cuckoo's Nest. I really gotta switch to decaf on days like this.

The 7^th International Multi-Detector Row Computed Tomography Symposium sounded innocuous enough. I assumed it would be a bunch of technical papers on the future of scanning, where I would read the paper in the darkened hall until lunchtime and then head off for some hot Hunan and home.

Instead, the place was like a carnival for cardiologists.

Excerpt: CAVE

An excerpt from my book The End of Medicine: CAVE

I was still chuckling when I stepped off the elevator on the sixth floor of Rhodes Hall. I followed signs for the CAVE - Computer Assisted Virtual Environment. The demo sounded good in the activities description, but it was past three and my interest was fading. I was due to meet friends at Ruloffs for bloodies. The door was closed, and as I opened it slightly, the room was mostly dark and thirty or so people were sitting around wearing funny looking oversized glasses. I spied an empty seat in the front row, tripped over a couple from the Class of '55 and sat down, almost crushing a pair of those glasses.

"You want to wear those. You won't get the 3D effect from that end." The voice came from a guy with a bizarre looking headset and a short Harry Potter like wand attached to a cord. He was standing on a 10 foot by 10 foot floor, and in front of two more 10 foot by 10 foot walls - three faces of a cube.

I'll remind you, these glasses are liquid crystal shutters, synched up to the display. We calculate and display images for your left eye and block out your right, and then every 60^th of a second flip over, display images for your right eye and block out the left. No more of the red and green glasses from the '50's."

The couple next to me nodded to each other and I thought I heard him whisper, "like at the drive-in, darling."

Excerpt from The End of Medicine: RAD or CAD

Excerpt originally posted at AlwaysOn

OK, nothing in that one, let’s keep going.” Dr. Solon Finkelstein was cranking through these at a pretty good clip. About a minute each.

The light box seemed like something out of the 1970’s. Films were clipped in two rows to some white flexible plastic. Dr. Finkelstein would hit a button and a motor would whir and the films would move to the left, wound onto some spool buried in the machine and a new set of films would roll into view.

“I’ve been doing these since 1967, you know. Not much has changed. Oh, the film is better, but the rest of this…” he waved his hands in front of the contraption.

To his right were color-coded files, the same ones I remember seeing in my pediatrician’s office in, well, 1967. Dr. Finkelstein wore a head mounted magnifier, one that you might see a jeweler wear. He would occasionally lean forward to look closely at the films.

“Some like to hold up a magnifying glass  but I like to keep my hands free for the papers and the dictation machine,” he  said.

After peering at the films, Dr. Finkelstein would push a button and a view of the films would come up on two small monitors that seemed to be gerry-rigged to the light box. He would then read a barcode on the patient’s records - how ‘80’s - and push a button on a phone and talk into a microphone “Patient Smith, negative, 12 month review, Solon Finkelstein.” Two marks with a pen on a sheet of paper and then “OK, let’s go onto the next one.”

I stifled a yawn. I had somehow neglected to tell my wife I was going to be checking out women’s breasts all morning. I think she’d understand. Staring at mammograms with a 70 year old radiologist is probably not considered, er, titillating.

“OK, here’s  something.” I shot up in my seat. Finally, some  action.

“Looks like some calcification there, no problem.” Oh. “But what’s this?” He took out a red grease pen and circled what he was looking at.

“Granular tissue, perhaps?” I was glad he was thinking out loud so I could understand what was going on, but I remembered that most doctors tend to think and talk simultaneously. It can be unnerving.

“Let’s see what R2 thinks.” He pushed a button those two tiny monitors lit up. They had the same identical views as the films we were looking at, except there were a few black triangles and asterisks on them as well.

“Uh huh, R2 sees it too. These triangles are just calcifications, but that asterisk means it might be a mass. Yup, we agree. Usually do. It might be a mass, let’s check last years film. Might be something. No, this is probably no problem. See, it’s the same size, it hasn’t grown. No problem. Good.”

Price Targets

Ah, price targets are back in fashion. And stupid investors will fall for them again. It's what we do on Wall Street while we wait for real news.

Analyst Safa Rashtchy at Piper Jaffray made a splash with a $600 target on Google. Not to be outdone, an old competitor of mine, Mark Stahlman (is he still at it?) now at Caris & Co., declared Google will hit $2000, or about a $650 billion market cap. Yeah, maybe.

But all this talk reminded me of a few paragraphs from Wall Street Meat:

Signposts in the Fog

A chapter written by Andy Kessler for John Mauldin's book, Just One Thing.

Years ago, I decided to climb Mount Washington, dragging a reluctant friend, Paul, along with me. It was a beautiful August morning in New Hampshire, not a cloud in the sky, birds chirping—couldn’t be better. Paul ran marathons and had already run eight miles that morning but agreed to my “little hike.” He still had his running clothes on; I was sporting a fresh Blue Oyster Cult T-shirt.

hwgh

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AO: United Paper Shuffle

From the cutting room floor, as it were, AO’s got an excerpt so exclusive that it didn’t even make it into Andy Kessler’s latest book, Running Money, about the paper shuffle that transformed the airline business and Wall Street itself.

http://www.alwayson-network.com/comments.php?id=7451_0_1_0_C

    “You can’t wear jeans,” the woman at the United Airlines counter told me.
    “What was that?” I asked.
    “I’m sorry, we have rules and codes of conduct to adhere to. I can’t let you sit in First Class wearing jeans.”
    “Really?” I had a cheap suit in my bag, but the last thing I wanted to do was dash into some phone booth and change into super executive so I could fly to Chicago.
    “We can’t have some sort of riff-raff in our premium sections.”
    “Well, I’m headed to a…”
    “This is United Airlines, global leaders in air travel and destinations.”
    “I’m interv…”
    “Just a second. Your record is flashing red. This is very odd. Are you some sort of VIP?”

Running Money - The Missing Chapters: Gold Bites

Since the release of my book Running Money, I’ve been flooded with feedback on my margin surplus theory. Some agree, some disagree. Like my eighth grade algebra teacher, most wanted me to show more of my work on how I got to my conclusion. Fair enough. Luckily I am in possession of The Missing Chapters, a section of Running Money that ended up on the cutting room floor (to make room for some other fun story, probably the Elvis Impersonator CEO!)

I had spent some time in the book describing the industrial revolution so I could look for patterns in Silicon Valley today. I did the same for money and banks and classical gold standards, which got cut. So here it is - I hope it can provide more insight into international trade and an intellectual property world.