Annie Lamont

Molly O’Shea says AI has crossed from experimentation into measurable healthcare impact after a decade of watching it produce few additional drugs or therapeutics. “Everything has changed in the last two years,” led by biological and chemical models, laboratory robotics, and simulations that could raise success rates in the most expensive, failure-prone product-development industry.

Devoted Health is O’Shea’s strongest proof that AI compounds a hard-won operating moat rather than replacing one. The company spent a decade securing state licenses, provider networks, distribution and primary-care infrastructure; over the past year it tripled in size, halved operating expenses and significantly increased EBITDA. Her call is unusually categorical: it is “probably the best example of AI in healthcare in the world right now.”

Healthcare’s first AI dividend should be augmentation, with much of the value accruing invisibly to patients. Administrative work consumes 25-30% of healthcare costs, while O’Shea says roughly 30% of radiology images are read incorrectly; AI can reduce both burdens without eliminating doctors. Patients may never credit AI, but they should feel it when clinicians stop typing with their backs turned and miss fewer findings.

O’Shea frames the US-China life-sciences race as an existential industrial risk, not a routine competitive cycle. She says roughly 50% of pharmaceutical companies’ external research dollars now go to China, whereas this was not happening five years ago, while China may already match or exceed US university patent output. Her response combines AI investment with stronger university research and “a complete reorganization of our FDA and processes.”

AI has raised the required quality of founders faster than it has relaxed the need for engineers. O’Shea wants technically fluent, product-oriented entrepreneurs who can change course, recruit humbly and understand distribution; the best create conviction “within five minutes.” The career lesson she still carries is blunt: “Your bar for entrepreneurs is not high enough.”

Only about 10% of today’s AI valuation inflation is justified in O’Shea’s view. A handful of companies can address enormous markets spanning software and services, but many niche businesses valued at $10 billion or $20 billion may ultimately be worth only $1 billion or $2 billion and acquired on EBITDA. “Only 10% of the companies in the world are worth it, and 90% aren’t.”

Oak is pairing unusually flexible capital with company formation in markets where AI can execute, not merely analyze. Its funds grew from $500 million to $2 billion, checks range from $1 million to $100 million, and 20-40% of a fund can go to early-stage investments. Augur received $100 million at launch to build supply-chain agents, while Halluminate’s simulated financial environments went “from zero to a hundred in six months.”

🔗 Original source & video: Annie Lamont: $14B Managed, 70+ Exits, 15 IPOs, 7x Midas Investor