This AI Founder Became A Billionaire By Building ChatGPT For Doctors

Key Concepts

• AI-powered medical research platform
• Information overload for physicians
• Free-for-physician model
• Advertising-based revenue
• Rapid user adoption
• Venture capital investment
• Proprietary algorithms
• Peer-reviewed publications
• Clinical decision support

The Problem: Information Overload in Medicine

The video highlights the overwhelming amount of medical research published daily, with a new paper appearing every 30 seconds. This makes it nearly impossible for doctors to stay updated on the latest breakthroughs and incorporate them into their diagnoses and treatment plans while managing a high patient load (e.g., 20 patients a day). This information overload contributes to physician burnout. Daniel Nadler, CEO of Open Evidence, describes this as a "dark age for physicians" despite the "golden age of biotechnology."

Open Evidence: An AI-Powered Solution

Open Evidence, founded by Daniel Nadler and Zach Ziegler, aims to solve this problem using artificial intelligence. The startup's proprietary algorithms search millions of peer-reviewed publications, including those in prestigious journals like the New England Journal of Medicine and the Journal of the American Medical Association. The goal is to provide doctors with fast access to the best available answers, complete with citations to the original research.

Business Model and Adoption

The software is free for verified doctors, generating revenue through advertising, similar to Google's model. This "free-for-physician model" is considered a key factor in its rapid adoption. As of the video's recording, Open Evidence has signed up 40% of doctors in the United States (over 430,000) and is adding 65,000 new users per month. The company's annualized revenue from advertising is estimated at $50 million.

Investment and Valuation

Open Evidence has raised $210 million in funding led by GV (Google's venture arm) and Kleiner Perkins, valuing the company at $3.5 billion. This is a significant increase from its previous valuation of $1 billion in February. Other investors include CO2, Conviction, and Thrive Capital.

Founder's Wealth and Strategy

Daniel Nadler, who owns approximately 60% of Open Evidence, has become a billionaire with an estimated net worth of $2.3 billion. Co-founder Zach Ziegler, the CTO, owns about 10% of the business, worth around $350 million. Nadler's significant stake is attributed to his initial $10 million seed investment, demonstrating his belief in the company's potential. Nadler stated, "One of the great things about being a secondtime entrepreneur is, I'm not an idiot. I think the second thing is going to be bigger than the first. So maybe the first $10 million should come from me."

Market Opportunity and Competition

The problem Open Evidence addresses is growing due to the exponential increase in medical literature, which doubles every 5 years. While other companies, such as Walter's Kluwer's UpToDate, are incorporating AI, Open Evidence is built with AI from the start, aiming for greater accuracy than general AI models like ChatGPT. Doctors are currently using Open Evidence in approximately 8.5 million consultations per month.

Regulatory Advantages

Because Open Evidence is not considered a diagnostic tool, it does not require FDA approval, unlike algorithms used for detecting conditions like strokes or sepsis. The free access model also bypasses the lengthy procurement processes often required by hospitals and large group practices.

Kleiner Perkins' Perspective

John Doerr, chairman of Kleiner Perkins, compares Open Evidence to Google for healthcare, emphasizing the transformative potential of the free-for-physician model. He stated, "I think open evidence looks like it's going to be for healthcare what Google was for the internet. He added quote it's the free for physician model that's the magic here."

Conclusion

Open Evidence is leveraging AI to address the critical problem of information overload in the medical field. Its rapid adoption, driven by a free-for-physician model and significant venture capital investment, positions it as a potentially transformative force in healthcare. The company's success highlights the value of AI-powered solutions in helping doctors stay informed and provide better patient care.