The Death of Olive AI

The lack of focus, coupled with the “champagne and cocaine” mentality brought on by “easy” VC money totaling almost $1 billion, is what killed yet another AI health startup, Olive AI.

Unfortunately, I must add another AI health failure to my lengthy list of recent digital health failures.

Thanks to brilliant reporting and the breaking story by Erin Brodwin of Axios earlier today, we now know that Olive is selling its remaining assets to three companies, Waystar, Humata Health, and Availity. The company valued at $4 billion just two years ago is being sold for scrap.

Olive AI died for three reasons:

👉 Lack of focus. Its CEO, Sean Lane, once proudly announced that Olive pivoted 27 times. But the truth is that the company grew too fast and lost focus on its core products and customers. It tried to expand into different areas of health care, such as prior authorization, population health management, and surgery analytics, but failed to deliver on its promises.

👉 Toxic culture and poor leadership. The company was accused of mistreating its employees, lying to its investors, and engaging in unethical practices. The CEO, Sean Lane, admitted that he made some missteps and took responsibility for the company’s demise. The company also saw several departures of its top executives in recent months.

👉 Most importantly, “easy” VC money and lack of accountability. In its quest to conquer the world, Olive received almost $1 billion ($902 million, to be exact) from investors and was on a massive spending spree. Olive’s investors included Base10 Partners, Sequoia Capital Global Equities, Vista Equity Partners, Dragoneer Investment Group, Tiger Global Management, General Catalyst, Drive Capital, Silicon Valley Bank, GV, and Transformation Capital Partners. (Source1, Source2) In fact, Tiger Global Management wanted to invest in Olive so badly, it seemingly got into a conflict of interest since it already had a significant investment in UiPath, a competitor of Olive.

Olive AI spent VC money on their own acquisitions, as well as setting up the following businesses, among others:

❌ Olive Ventures was a venture capital arm of Olive AI. (Source1, Source2)

❌ Surgery Analytics: This was Olive AI’s product that helped health care providers optimize their surgical operations and outcomes. This business was part of Olive Ventures. (Source1, Source2)

❌ Clearinghouse: This was Olive AI’s claims and remittance product that helped health care providers submit and process claims electronically. This business was sold to Waystar. (Source1, Source2)

❌ Patient Access: This was Olive AI’s patient registration and scheduling product that helped health care providers automate and streamline the patient intake process. This business was also sold to Waystar. (Source1, Source2)

❌ Prior Authorization: This was Olive AI’s utilization management product that helped health care payers automate and optimize the prior authorization process. This business was sold to Humata Health. (Source1, Source2)

❌ Population Health Management: This was Olive AI’s product that helped health care providers manage the health and wellness of their patient populations. It also provided tools for risk stratification, care coordination, and quality improvement. This business was divested by Olive AI in 2023.

❌ 340B Program: This was Olive AI’s product that helped health care providers participate in the 340B drug pricing program, which mandated drug discounts for Medicaid and Medicare patients. This business was also divested by Olive AI in 2023.

I pitched my own startup, WellAI, to Olive on January 20, 2021. At the time, Olive was looking to invest in a sophisticated AI triage solution, and I thought we had a good shot. There was definitely arrogance present at that meeting (as it probably should have been). In the end, Olive’s answer was short and sweet, “Too early”.

Unlike Babylon’s death, Olive’s death doesn’t seem to be about lies and deception, at least at the moment.

Olive’s story is the “champagne and cocaine” scenario of “easy” VC money. When money comes easily to you, you tend to treat it with no respect. That has actually been the key story with recent digital health VC funding.

I also wrote about private valuation manipulation when I wrote my 64-page essay on Babylon’s alleged fraud. We must hold VCs accountable on their narrative-based investing. Time and time again, VCs and other investors are pouring their money into companies with horrible finances based on the “growth story”. While trying to find a needle in a haystack in the form of a new Tesla or Uber, VCs are taking enormous risks at the expense of their own VC investors.

I’ll let you in on a little secret: if you’re craving all the juicy details and inside scoop on the Olive AI debacle, the definitive guide is the epic breakdown by the incomparable Thomas W. Dinsmore. It’s a must-read deep dive into Silicon Valley's latest digital health disaster—available here, here, and here.

The opinion expressed here is my own. The story is ongoing. Please follow Erin Brodwin and other reporters for the upcoming details.

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