Inclusive Stakeholding and Redefining Health

Thank you for having me. We have been looking forward to having you on with us. Talk to us though, a little bit about your your world and your approach. And you're investing because you are looking I feel like to make things better in this world in a couple of different ways. Tell us a bit about Palo Alto Investors though. Yeah, we've been our thirty years and we invest in things that improved the lives of people, and

healthcare is a great way to improve their lives. Now, all that said, we've been extending life without actually addressing aging. So the product of healthcare ultimately is old people that need more healthcare. So that's actually the vicious cycle. Um, So as amazing as the healthcare industry is and all the people that work in and uh at the tratructor we're on, it's just gonna self inflate, get bigger and bigger as populashing gets older, and then eventually is going

to consume the whole economy. So as amazing as it is, I think we need something completely different. In fifteen years, the average healthcare costs of an American, I take care of an American, it's gonna equal the average salary. So it's gonna be game over fairly soon. So we need to radically shift our approach. So how about keeping people healthy uh and really work on the underlying causes of

aging rather than treating the symptoms of aging. So treating things like uh, diabetes and hypertension and obesity are really addressing the symptoms and not your underlying cause. Then if you can actually improve the underlying health and make sure you don't age, then you don't end up with the symptoms of aging, then you would actually not only be able to live longer potentially, but have a much healthier quality of life as well. All right, So that makes

an immense amount of sense. And and I think you, as someone who is not only a medical doctor but also an investor, understand that better than we do. That the economics of the business are such that that's not how it works. Is that the problem the the economics of the system or is it more structural than that. Well, it's interesting. So I think the economics actually play a key role here because incentives aren't there to look at that problem, the deeper problem, and so therefore it's just

been hiding in plane side. It's just been lagging. Um. So I do think that people are becoming aware of just how important opportunity aging is as a scientific field, and also it's an investment investable opportunity. Where does traditional health care they'll play into this, like pharmaceutical companies and insurance companies. Are they the ones holding us back from really changing the model? No, it's actually us. So we

just forgot to really do inclusive stakeholding. If you actually think about all the stakeholders in the system, um, then you would actually everything differently, including the science itself. But we've been doing narrow stakeholding, and so we've really missed the opportunity to think about the problem. Right now, everybody benefits a little bit from the system, except when you look at the long haul, the future version of ourselves,

our bodies and the system is much worse off. So we've gotta we gotta internalize that externality so we don't pollute the world with old sick people. We actually need healthier population. And I think this is really really straightforward to do in terms of systems perspective. So how do we get there? So yeah, I'm trying to understand, right, So what does that mean in terms of our approach

to how we do things? Um? Well, so actually I'll talk about the biology first and then how do we how do we get how do you do this in other systems because the healthcare and institutions were terrified of them. I mean, it's an amazing system, but people are not happy with health care. So really we have to redefine health. Um, the way you and I think about health. Um, there's

like this vague definition. But biologically, I come from a medical background and study and your biology in college, and I think about health as homeostetic capacity and not homeostasis is when word change. But for the audience, they can think about as a weebo wobble. You're young when you push it. Everything self centers, and after forty, your weebel

doesn't self set anymore. So all of a sudden, you can't do the things you used to be able to do, Like you can't ride a roller coaster because now when you come out of it, you don't recalibrate your kind of wobboys, I don't want to do it anymore. I am well aware of this phenomenon. Thank you for pointing it out, Like it didn't face you when you're younger forty it's gonna change. It's like, it's not gonna change

for me, And then it did. Right. There's so many things we start to feel at forty then we never felt before, such as when you're young, you don't feel cold cold at fifty. My kids are running on a T shirt at fifty, I got two layers on. Yeah, when it's eighty, I'm sweating and I can't stand it. They're like totally fine. Um, So what's really happening is, um, we're not able to tolerate the dynamic range anymore, the variance anymore. Um, Like everybody wants to be saving to

use all the time. When you go to California, your blood is not thin it. You're losing home. Instead of capacity, you're weels getting weaker. Same with late night jet lag, hangover. Everything's longer to recover after forty broken bone cuts, everything's longer. So you weebel doesn't self centered. Now I want to go to a restaurant, my pupils don't open up enough, so it's too dark. When I go outside, it doesn't close enough, it's too bright. It's all homeostidic capacity um

altitude at eight thousand feet, I'm huffing and puffing. My kids are sprinting around there, like Dad, why can't you keep up with us? It's because my ability, my weebel bobble doesn't self So how do we are we just gonna have to deal with that? Or how do we better deal with that? Yeah, this is the I think one of the great paradox of the twentieth century. I think we swung and missed the twentieth century by the way.

I shouldn't mention things like that. There's things that you can't feel that wobble when you're young, that always self centered, like your blood sugar and blood pressure always self center. After forty it stays high in some of us and we call it diabetes and hypertension. Inflammation is a good thing when it's self centers. If it stays lag, that's why it's dangerous. Right. So instead of about thinking about all these things that separate diseases, I'm a kind of

a lumper. I think it's all one disease. It's impossible thousand different things are going wrong. One thing's going wrong, your weeble doesn't self center. And then the way we treat it, I think it's been uh seductive, but I think it's been exactly wrong. So the best way to lower blood pressure is not to take a blood presure lowering medicine. You know what it is, exercise exercise, and

when you're exercise, you're ray in your boot pressure. So when you reach when you take a blood persure lowering medicine, it's like propping up chouldren. They get weaker. So every drug in the market were now causes atrophy of your innate system. So you need more drugs. This is the self fulfilling prophecy, more drugs. But this we have to take a break and we'll come back and talk more. But that gets to my point. That is part of the problem. Like the pharmaceutical industry. Right, the system is

exactly right. We're gonna talk about this systems shortly, so we need to change it incentives. So what our family did was we actually need to focus on homeostetic capacity and studying the body dynamically. All of your book, all of your annual I'm sorry, so all of your tests we should be testing, not your blood presure, heartwrey, glucose cholesterol. We should be testing your HeartWare recovery, blood person recovery from exercise, glu close recovery. So everything should be four dimensional.

Everything should be dynamic diagnostics intead of static dyno. Al Right, hold that thought. We're gonna come right back. We're talking to Dr June. You and he's president of Palo Alto Investors. We are still visiting with Dr June. You know, he's the president of Palo Alto Investors. He's based out in Palo Alto. So going to take this sort of quick a bit that we have here to ask you about sort of the mood and the tenor of Silicon Valley. Right now, you've been there for a long time, you've

sort of seen it grow into what it is. How are people feeling right? Now, especially as big tech comes out, are a little more fire sure, and overall it's the rising sun mentality and Silka Valley there's a can do attitude. Yes, there's always challenges and everybody's always thinking about how do we make it better. So it's a little bit different than where I grew up in the East Coast, I mean, which is more um, you know, a little more pessimistic.

All that said, there is a challenge out there about how to really address the issues that are emerging. And this is where I think we have an enormous opportunity to Silken Boy. His major constribution to the world was skin in the game, giving labor at a time when capital have had not included labor a hundred years ago. So skives them of capitalism and socialism. Uh, And we have that discussion today too, right, But the inclusion of labor changed everything because now you're on the same page

Skin in the Game what. But what do you think about big tech in the future. Certainly in terms of the privacy concerns, I feel like certainly regulators on both sides of the AIS, I'll agree that maybe something needs to be done. I feel like those things are all symptoms kind of like the news going on today when you don't have inclusive stakeholding, if you don't include all the stakeholders and you inavertently actually exclude them, and that's

that's when the suffering starts. So to me, internalizing those externalities, essentially, all those issues are pollutions of a system that doesn't include stakeholders. So while still confided that a great job included labor, we're not doing a good enough job including environment, including consumers. Imagine now tokenizing everything making them a stakeholder. So we're not We're thinking about them much more like the way parents think about kids. Will that change that?

Will that change totally double? We have an algorithm now, no, no, no, But do you think Big tex is going to be forced to think a little bit more about that? I think they're gonna do it on their own, because everybody guess that we're in the global village where this closer great society, and I think we just internalize all the stakeholders were neglected. I think we have a path forward. All right, stick with us. We're going to continue this conversation in just a minute. Dr Jr, President of Palo

Alto Investors, here with us in New York City. You're listening to Bloombergs this week. Jason Kelly, Carol Lasts are here on a Friday afternoon after a very busy week. A good conversation ahead. This is Bloomberg Continue our conversation with Dr Jr. President of Palo Alto Investors. We had such a fascinating conversation a few minutes ago about sort

of the biology aspect of this. I want to broaden it into this notion that you have around inclusive stakeholding, because those are words that you hear, they're a little intimidating, and yet what you really have is a vision of the future that is quite holistic in all senses. Tell us about it's it's it's no fun to live a long life and healthy life if the plant is like in the decay. Right. So we want to now expand the same concept of not treating those symptoms, but treating

the underlying cause of the things that were terrified. We're terrified of all of the institutions right now. Why is that? So we have the simplest explanation for what's happened of the last time thousand years. So I come from an old kin tribe, and once upon a time all of us lived in kin tribes, and in a kin tribe, the incentive of such that you had kins skin in

the game, and everybody in your community. You stop genetically in your kids, in your grandkids, twenty partent cousins, and so it was like it was like a startup and you acted, You act on quenty where you have invested interests. That worked for a million years until about ten thousand years ago, after the diaspora, we remeden global tribes. Uh and in a global tribe with no kids skin in the game, people focus not on you. They focused on themselves as the first priority. So now again there you

replace kinships with kingships. So stewards of a village were replaced by leaders of tyranny. So every mixed society went to a tyranny. So by your ten thousand BC, you had you know, king tup building pyramid schemes from sous. Finally Plato comes out and says, we have a format problem here, let's do the republic, let's vote these bombs out. Unfortunately, he didn't anticipate that republic leaders would also self deal, and so you had corruption, and by year zero all

the Republican collapse in the nearest right. Um so it took about fifte years. You're in the dark ages, you've got tyranny of um uh, you know, all sorts of institutions, vassal states, feudalism. And then fifteen fifteen hundred we finally updated the algorithm, which is a biologic algorithm called Hamilton's rule, which is skin of the game with the social algorithm called the joint stock company. You can now finally give others a steak. But we didn't include labor, which led

to split of capitalism and socialism. Sods capital was written and Mark's thought it was a capital as this you know inherent problem right now social things that capitalism um, you know is doesn't serve the broad public. Capitalist sying social doesn't serve the broad public. In reality, they both struggle because of exclusive stakeholding, whereas if you do inclusive stakeholding,

you internalize the stakeholders, then they would both work. Now we also didn't include third world so imperialism and colonialism they're all epiphenomen the same thing. Exclusive stakeholding of third world and labor, so they let the labor unions now silicon values. Major contribution in the world is um, they actually included labor. So once you include labor, everybody is a stockholder, your co owners again, just like you were in the village. So all of a sudden, they self inflated.

They created unbelievable things because they're all online that go congruous, incentives are aligned. The only issue is they didn't include users enough as a stakeholder. So now they're creating call before Congress. Well, and I want to pick up on that because that's such an important point. If you think about the Silicon Valley of forty fifty years ago, there was this sense that they are creating something for the user, and now when we think about Valley, there is a

sense that the data is the is where the value is. Yeah, exactly, So everything kind of becomes a commodified version of itself. Like in a kin tribe, you tell the story because you want to serve the public, and the post contribe you tell the story to promote yourself. So all the stories that emerged after the kintribe era are the fake versions. They're the ones that are most sellable, but they're not actually true. So for instance, UM, in a kin tribe,

your mom has your best interests in arts. So all the food she was giving you was for you. Now in the modern era, all the food is to maximize profits right of somebody else. Same with information, you just be for you and now it's about them. So now that the end, you have the race at the bottom. If you have one food company put in less sugar, another stuff puts in more. If get one media company put in less, clicking on another puts in more, so you always end up with high fuxiness corn syrup. You

always end up the Cardassians. You can rerun the simulation of civilization. You always have the worst at the bottom because that's the race to the bottom line. And then what surfaces the power And then we feel like, oh my god, we're like we're at the We're kneeling before the powerful institutions all over the place, social economic, political ones. So, um, I think it's really getting the story right. Um, so

this helps explain the equality gaps completely, right. Equality inequality is an emergent property of the power, right, So the way to solve that is to to internalize the stakeholders, and the stakeholder could be a sigling one like the environment. So if you're a company that doesn't include university stock stockholder, then you will probably extract from to and pollute them.

Um same with like intertemporo imperalism. Roosevelt didn't sufficiently include future children as a stakeholder, so again that basically borrowed from the future and then leaving them debt. And you know, again they just didn't think it through. And that's why you have to include all these stakeholders. Be really mindful so we don't keep having these whackamore revolutions, just like what health care. So that's the solution, because we only

have about a minute or so. So we have a grand challenge on inclusive stakeholding, and we want you to tell us how to rewire incentives to create a much better future for everyone. So we're proposing we give some ideas. Instead of universal basic income, which is a payoff from the system that has already caused inequality. We got to solve the inequality, and the way to do it is

universal basic stakeholding. Give everybody stock in the country rather than a payout, so it doesn't feel like an extract. Do you give everybody stock in the kind of you can tokenize it like on blockchain. So just the same thing as like, how do you give stock in a

company just assigned? The mistake? Right, just that I see you and here's a stake for you to the same thing with health insurance instead of getting paid on a one year tinder contract which is fee for service, and then they put your on drug and your one year older and sicker, and then you're somebody else's problem and at six five year the public's problem. That's just you know,

they're just kicking the can down the road. How about you being paid as an insurance company as a one in twenty like a hedge fund, get paid a little bit of management feel front, and then you get paid as a percentage of health savings ten years on the road. So as an insurer, now I'm an investor in your health. I'll do preventative health and I benef I win as you win motif. That's very interesting. All right, You're gonna have to come back and see us, uh and let

us know how this is going. There's a book. Where do we find the book? Inclusive stakeholder? You can just go go on Amazon, uh, and everything we just talked about, it's just a prologue. That's just a prologue, everything else, all the other chapters about what you can do from now? All right, very very good, really interesting. Dr June, you know what a great Friday conversation President of Pelo alto investors his idea about inclusive stakeholding. It's radical, but doable.