What sectors to bet on over the next 15 years

Transcript

Hi. I'm Hemant Taneja, and I'm the managing partner at General Catalyst. 

I believe, and this is actually my personal raison d'etre, is prove that the best returns will be at the intersection of financial and impact focus. You know, there was this false choice, if you look backwards of, do you want to be an impact investor or a real investor or financial investor, I think when you think about the kinds of companies we're building with venture capital now, whether it's the next banking infrastructure or the next healthcare infrastructure or education or workforce you can't say, here's a company that's going to be a great financial return, but it's not going to be positively and skillfully impactful on society, that's a false choice. And so you have to think about things at the intersection. 

So look, if you had $100 million and you wanted to create a portfolio that's aligned with innovation, and you have a 15 to 20-year horizon, I think you would probably invest in a few sectors deeply. Then you would probably take a small piece of your investment in sort of mainstream technology broadly. I mean, that's, that's just the mindset of a concentrated investor. Those sectors to me are healthcare, fintech; I think cryptocurrencies on a 15, 20-year horizon is interesting; I wouldn't over deploy in that, but I would make it part of the portfolio, and I would also think about sustainability. This is a new area, which is obviously a humanitarian crisis that we're dealing with, and from what I see, a lot of great entrepreneurs are getting into it. So on that type of time horizon, I would also build some exposure in that. 

Sustainability is very early, from my standpoint. The company that had the most impact from a sustainability standpoint was Tesla because they've built a phenomenal consumer product and forced an entire industry, which is a large emitter, to like rethink its product strategy. That's an amazing impact. I don't care if Tesla's overpriced or underpriced at their market cap today. I do care that it made every other automobile maker respond to it and go in their footsteps because that's the only way they can compete. So that to me is a signal and sort of learning from that and saying how do we do that around all the carbon-heavy parts of the economy for the demand side, sort of innovations, I think is the way sustainability 2.0 probably will work. And that's a lot of what we're starting to think about to say, okay, how do we play that? 

I think another place where I'd spend really concentrated time is in health care, which is what I'm currently focused. There, the timing seems to be right. And a lot of great entrepreneurs, both from technology and health care, are deeply immersed in it. The timing is right, and we're in the process of building several companies, many of which we founded in the firm around sort of an overall thesis that we call health assurance. So health assurance to us is two specific things. One is, first and foremost, to transform the consumer experience and how and what they get as part of their health care. Consumers want to be healthy. They don't want expensive sick care. So you have to kind of rethink what those experiences are for them. The second thing that is equally important is we have an obligation to reduce the GDP of health care. And like every other market, we're a capitalist. We're thinking about how do we increase the size of the pie? But we need health care to be affordable for society. So it can't be 20% of GDP. So the balance that we look for in companies that we invest in is how do you accomplish both of those goals at the same time? Honestly, in 2019, I thought that was a great thing to be working on for the next decade. And then the pandemic happened last year, and I feel like everything we thought we would do in the next ten years is going to happen in the next four to five. And we feel fortunate and proud to be working on this set of problems that got exposed over the last 18 months.