In Search of Community and Meaning: The Rise of Psychedelic Investment

Podcast Highlights

• What is the “positive living space” and why is it so important?
• The underlying failure of our current medical and wellness systems.
• The “wellness gap” and how to close it.
• The investment potential of psychedelics.
• Amanda’s approach to choosing which companies to invest in.
• The huge growth in psychedelic investment in the last few years, where it’s headed in the future, and the importance of keeping the space credible.
• Why nonprofits are vital to the future of psychedelics.
• Why Amanda chooses not to invest in the cannabis space.
• Psychedelics as the ultimate adaptogen.
• Determining how to deliver care in a new paradigm of psychedelic medicine.
• Holistic treatment protocols, including psychedelics, lifestyle change, and mindfulness.
• How connection and community fit into wellness.
• A compelling view of the future of psychedelics.
• What a Public Benefit Organization is and how they solve problems in the long term.

Show Links

1. _able Partners
2. Microdosing
3. Four Sigmatic
4. Goop
5. MUD/WTR
6. Bulletproof
7. Oura
8. Synthesis retreat
9. COMPASS Pathways
10. Usona Institute
11. “Why Third Wave Became A Public Benefit Corporation” by Paul Austin

Podcast Transcript

0:00:00.7 Paul Austin: Welcome, to the Third Wave podcast. I'm your host, Paul Austin, here to bring you cutting edge interviews with leading scientists, entrepreneurs, and medical professionals, who are exploring how we can integrate psychedelics, in an intentional and responsible way for both healing and transformation. It is my honor and privilege to bring you these episodes as you get deeper and deeper into why these medicines are so critical to the future of humanity. So let's go and let's see what we can explore and learn together in this incredibly important time.

0:00:40.3 PA: Listeners, do we have such an interesting sponsor for you this week? It is Kraken Kratom, or Kraken Kratom or Kraken Kratom or whatever, and however, you wanna pronounce it. This sponsor is quite a bit different from some of the other ones that we've had on the show before. We've never actually had a specific substance, which we have the guide about, because all of the substances we talk about on Third Wave are, for the most part, illegal, which is why we're providing education to shift that, but Kratom is legal. It's something you can purchase, and it's something that I've personally used here and there. I've probably done Kratom maybe four or five times, very, very on occasion. Usually in the evening with a couple of friends as more of a social thing, or go to a Kava Bar, try Kava and Kratom together.

0:01:26.3 PA: And this week's sponsor is Kraken Kratom, who strives to deliver the highest quality, most thoroughly tested Kratom products available from powders to extracts to capsules and tablets, Kraken has what you're looking for. They're GMP compliant and meet extensive quality control standards. And Kratom in particular is great for a number of things; energy, mood, general aliveness, but it also has a dark side. Kratom is slightly more addictive than things like Ketamine, much more addictive than things like the classical psychedelics, so it's good to use in an intentional way with some sort of ritual and to do that in a way that helps with both the healing and the transformational process. So if you want to learn more about Kraken Kratom, go to krakenKratom.com, and you can find out more information there. Use the coupon code, 'THIRDWAVE', that's one word for 20% off of your Kraken Kratom order. Thanks so much.

0:02:27.3 PA: And this podcast is sponsored by Mindbloom, legal psychedelic medicine is here, and it's available through Mindbloom. Mindbloom helps you transform your life with safe science-backed psychedelic therapy. If you're looking for your depression or anxiety breakthrough, Mindbloom provides a fully guided and clinician monitored experience tailored just for you. Some clients see results as soon as 24 hours after their first session. Mindbloom is in fact our first official partner here at Third Wave and a company, an organization that we support. In fact, I'm going to start my own Mindbloom experience in the coming weeks and will write about my experience going through Ketamine therapy to address both Cannabis addiction and general anxiety. The Cannabis was to cover up the anxiety, and I can't wait to share my own transformation with you.

0:03:29.4 PA: Hey listeners, welcome back to the show. Today we have Amanda Eilian on the podcast, a founding partner of Able Ventures, an early investor in Synthesis and also ATAI, and we've brought her on here to talk about investment in the psychedelic space, investment in mental health, investment in wellness, and any other things that might pop up in our conversation. So Amanda, thank you for joining us.

0:03:50.2 Amanda Eilian: Thanks for having me, Paul.

0:03:52.4 PA: So for a little bit of context for our listeners, if we could just start with your background in terms of how you got into mental health, wellness, investment, like what's your sort of origin story, in terms of how you started to get involved with investing specific to the psychedelic space?

0:04:09.5 AE: Sure. I won't go too far back 'cause I could probably go back to the fact that my mother is a nurse and have been interested in sort of broadly wellness for a long time, and growing up in rural Vermont and the power plants, etcetera. Able Partners is an early-stage venture capital fund, and we're focused on what we call the positive living space, so those are companies that are making the daily lives of consumers healthier, happier, and more meaningful. So early on in our evolution, we were very focused on the wellness space, before that was a big thing for institutional investors and companies, like Goop and early in companies in the wellness space, like Daily Harvest, Bulletproof, Moon Juice. But what we really realized over time was that a lot of that wellness seeking behavior was, unfortunately, a symptom of underlying inadequacies in our medical and other systems, to treat certain conditions in certain communities, and over time have evolved to focus more on the intersection of consumer and health, in addition to the broader wellness space.

0:05:11.9 AE: And within that, we have a thesis that we call the wellness gap. And the wellness gap, we define as a disconnect between measures of economic well-being. So if you were to look at GDP per capita, the amount of money people have in their pockets that keeps on going up into the right. But when you look at other measures of physical and emotional well-being in the United States, unfortunately, those have been stagnant to down, so you can actually graph this out and see this big disparity on a graph, which we call the wellness gap. And we have focused increasingly on companies that are looking to close that wellness gap. And I would say as part of that, and related to why some of these areas haven't received as much investment and are still large problems, is we look at things with a lens of stigma. So where we think that there are conditions and communities, that are underserved because of historical, cultural stigmas. And so mental health, and then on the second step, in particular psychedelics, those are areas where there has been an incredible amount of stigma in our society, and a huge opportunity, both to make the world a better place and as an investor to do well by doing good, which is how we generally organize our activities at Able Partners.

0:06:22.7 AE: So, unfortunately, I mean, none of this is new for you or your listeners, but one in five US adults experience mental illness each year, suicide is a second leading cause of death amongst adults ages 10 to 34, which is just horrifying. And these are all old numbers. Unfortunately in COVID, these deaths of despair, the lowering of our average life span have unfortunately increased so these things are only getting worse. And if you look at the comparable treatments, you have SSRIs, which, until the FDA's approval of SPRAVATO, which is obviously based off of Ketamine, no new treatments have been introduced for the mental health space in 30 years. And the treatments that we do have, well, I think they're life-saving for some people, and I wouldn't wanna discourage people who need them to take them, but they take four to six weeks to work, right? 40% to 60% of patients fail to improve on their first SSRI, the side effects can be significant. And I think for those of us who have spend time in the psychedelic space, one of the key contrasts that you can draw, is it feels like psychedelics have the potential to actually work at some root causes, and actually have some healing potential. They're much more growth-oriented, whereas the current treatments seem to be more oriented towards suppressing symptoms, right?

0:07:32.9 AE: But on the psychedelic side, and we're not biotech investors, we generally don't invest in new drug development, but what we saw was an opportunity where historically from 1940 to 1970, you have 40,000 US clinical research participants and studies involving psychedelics, and although those studies were done really differently than we would do studies today, perhaps, we got comfortable that there was enough signal in that noise that your risk of failure at a phase one where normal drugs would fail 50% of the time, was much lower, and so we could get a lot more comfortable taking that kind of risk. And the safety profile was really strong, as The Economist had published an infographic showing that risk of harm to self or others is the lowest of all, relative to Tylenol, alcohol, anything else that we're using on a regular basis, the efficacy, again, strong signal there from those early research. And frankly, the market doesn't have a lot of competition right now, so, unfortunately, despite the large and growing need, the new drug development pipeline for mental illness is weak at best, right? So pharma giants have cut their research on psychiatric disorders by 70% in 10 years, 0.2% of the pharma drug pipeline is for depression drug candidates.

0:08:46.0 AE: So even though there's this big and growing need, we don't have a lot of new innovation coming to market. And at the time that we got interested and invested, you know, around the time that you and I first met Paul, you can probably attest to this, there were not many if any, institutional investors looking at the space, and I think for us, that was an opportunity that we could really play an outsized role with a good amount of capital, given the fact that nobody else was taking this seriously yet. So I think all those things together made it a really interesting space. And I guess the other thing is when you look at the potential of these drugs, and we look at mental wellness on a spectrum, and if you look at mental illness where you have too much entropy or chaos, like the schizophrenias, etcetera. And then you look at the other end of the spectrum, which are these diseases of rigidity, everything from anorexia to OCD to depression to anxiety, all that huge bucket, which is the majority of mental illness across the world, all show potential from psychedelic drugs. So it felt like once you laid out all of those factors, it was a no-brainer, that if you really wanna make a difference in mental wellness, that this was worth further investigation and investment.

0:09:51.8 PA: And this was mid to late 2018 when you were starting to look into this. This was... I remember we spoke about this at Horizons, which was October 2018, and you invested in Synthesis soon after that. I think you had already been looking at a tie fairly closely, and I do wanna come back to that, but one thread I wanna pick up before we get deep into the psychedelics, 'cause once we're there, we'll be there for a while, is this sense of your investment thesis. And I would just love to hear a little bit more about the origin story behind that, and for context, I remember I was in Berlin in mid-2017 eating Turkish food with a couple of friends in Kreuzberg, and we were talking about how all of these things that were previously stigmatized, for example, in the '60s, psychedelics, Cannabis, sexual health, all these things that were counter-culture, were now becoming mainstream culture and much more sort of commercialized if you will. You were also, and you have been, very prominent in terms of investing in companies that are led by women who are founders, I think 75% of your portfolio is led by that, which is also not a stigmatized thing necessarily, but it's just much less common. So I'd love to hear a little bit about how did Able partners start? What's sort of the origin story there?

0:11:07.3 AE: Yeah, so my co-founder, Lisa Blau, and I both came at this from the entrepreneurial space, so I had co-founded and served as president of an enterprise software company, which we ended up selling to a strategic. I was often the only woman in a room, certainly when there was any tech get together in New York City, and I think that's changed hopefully a little bit now, but let me tell you, being a pregnant woman in a tech meet-up in New York City is about the most alienating thing that you can be, so I think we just had a visceral understanding, and Lisa had also been a founder actually of a start-up in the wellness space, one of the early start-ups in the wellness space. I think we both had a visceral understanding that there are a lot of high-quality founders of all genders and of all diverse types of backgrounds, and yet you look at the numbers and 2% of venture capital funding. It went down again last year, actually, 2% of venture capital fundings go to solely led female founder businesses, even though all of the data shows that those businesses outperform all-male teams on a number of different factors from dollar return for dollar invested, just gross profit potential, many different factors.

0:12:14.2 AE: So I think we were really aware that there was this arbitrage opportunity, combined with the fact that the wellness space where we both had a passion, was this really early and emerging space, and at the time was sort of stigmatized, people thought you were really kind of crazy. There was a time, I remember Juice Beauty, which is a company that I sat on the board of, which is the largest organic skincare company, and I remember when Karen, the founder there, was launching the company and we were all kind of like, "Well, what's organic really mean?" People weren't even eating organic when she launched that company, and although she's one of the originals in the space, and there's a lot more knowledge. So I think we understood that there would be a lot of non-traditional founders in this space, perhaps that there was a long-term secular shift in consumer behavior towards these better for you activities, and we felt particularly well-positioned. I had a background in the investment space, we both have the entrepreneurial experience, we both had a passion for the sector, and I think that we felt like we could bring a new angle to early-stage investing in the space.

0:13:09.0 PA: And so when you're looking at companies to invest in, how do you... What's your due diligence? How do you decide which companies to invest in, obviously, you've had some tremendous success, Bulletproof and Goop, and Four Sigmatic, and ATAI, and COMPASS, and MUDWTR, and Oura Ring, and there are several others, of which I'm a huge fan of, almost all of these. So you've been very, very good at picking the right investments to go into. What's that sort of approach that you take to understand, "Okay, this is a great opportunity. This is a great investment. We really wanna move forward with this?"

0:13:42.8 AE: Yeah, and the early-stage investment is very different than mid to later stage or growth equity investment, all of which I've done at different points in my career. Early-stage investment is focused a lot more on the founder because somebody could come to you say, I'm gonna sell mushroom coffee and end up selling shoes, and they could be very successful doing that, but you're really betting more on the jockey in that type of investing. So you have to be really comfortable with who the person is, and I think one thing that we have gone out of our way to try to do is that traditionally, as we know, venture capital tends to fund a very specific type of person, and something like around half of venture capital partners went to Harvard or Stanford, and so they tend to fund people like them.

0:14:23.6 AE: Well if Lisa and I both... Also did go to Harvard, but I think we go out of our way to make sure that we're funding people. I grew up in rural Vermont on a dirt road, very modest background. Lisa grew up in a Borden Town in Texas, and so we're trying to serve consumers who are like the people we grew up with, so while Wellness did start out very coastal, I think we see exciting data and feedback from our companies that some of their best customers are actually in the middle of the country. People who are looking for a solution to take their wellness into their own hands. So I think we look at things with that dual-lens. We live in a coastal city right now, we are certainly very plugged in to what the most interesting and exciting trends coming out of those markets, but then we filter it through our own experiences of what is actually worth the money in rural Texas and rural Vermont, to a more mainstream consumer, because that's how these businesses ultimately have to scale.

0:15:15.1 AE: And so I think that's a little bit about our process. Again, very founder-led, in some cases, there is more of a technology component, in which case there's a different diligence stream around that. We have relationships with a lot of the big strategics, so depending upon the category, we'll often do a lot of work there to validate some of the market sizing, etcetera, but again, most of it comes down to the founder at the very early stage.

0:15:45.7 PA: And so how has that then played a role in terms of the psychedelic space, or maybe just even to step back a sec before we dive into that, what's your take on the psychedelic space as it stands in February 2021? Obviously, things have changed a lot over the last few years. There's dozens of companies that are either already public or that are going public. Many of them are focused on drug development, clinical trials, some of these things. So what's your understanding of the general space, the sort of investment that's going on in the psychedelic space, both your involvement and outside of your involvement, just to help our audience understand the trajectory of development over the past few years from a very experienced investor.

0:16:31.0 AE: When we first met at that Horizons conference. I don't know if there were any other investors there and that probably... If there had been an in-person conference this year, I think that would be very different. There are now several conferences geared solely towards investors in the psychedelic space just to show how far this has come. And that's been good and bad. I think the increased visibility is helpful, I do think that it's helpful that you get more capital into the space, I think it's also... It's led to the creation of a lot of companies that are maybe a little bit more opportunistic, and I have nothing against people trying to turn a profit, but people who are maybe not thinking as thoughtfully about the long-term potential in the space. So there are some less credible players, which has made it really noisy, in particular, we do see a lot of people coming from the Cannabis space who saw the value creation there and see a lot of parallels with the psychedelic space, and they are both formerly stigmatized substances, scheduled substances, but I think a lot of the similarities end there. So I think they're taking in many cases, a different approach, they're not all terrible people, but I think they take a different approach and a different angle, and I think that some of the enthusiasm in the market may be a little bit ahead of where the market is, so I would say when we first started investing, I would say, I just wanna buy the index on psychedelics.

0:17:53.2 AE: At the time, I think there were three companies you can invest in, and we invested in all of them, and we wanted exposure because we knew that it was a little too early to know where the value creation was going to be, but we knew that there would be, and we wanted exposure. But over time, that has changed a lot, so there's a lot of opportunities of where to invest your capital, and I think when we think today, where is the value creation going to be, it's a little bit more complicated. There's the new drug development side, which I do think has a potential to deliver some outsized returns in some particular areas, certainly a lot of complications around that, around IP, etcetera, and the huge amount of capital that you need to prove out a drug in the traditional medical model, which I think will be important to do, but that's frankly not like where our skillset lies. We're not biotech investors, we could identify the space early when it didn't require as much precision, but now that's probably not our best and highest use.

0:18:45.0 AE: I think there's stuff around distribution, so what I think a lot of investors don't understand right now is the distribution question. And so those of us who have spent some time in the space, you understand that this is very different from either getting something out of the dispensary in the Cannabis space or taking your SSRI pill every day. This is something that requires an investment on the part of the patient and therapy both before the session and integration after the session, a full day of what could be a very challenging experience. And probably for the best outcomes, we see people who are willing to adopt lifestyle changes which are catalyzed by their psychedelic experience, but need to also stand on their own and require effort on the part of the patient.

0:19:30.5 AE: So it's asking a lot more of the medical system, it's asking a lot more of the providers, it's asking a lot more of the patients and their families. And I think that's gonna be the bit to be worked out going forward, and I think that will make this a rockier adoption perhaps than some people realize at the outset, if you haven't spent that much time. So those are some of the things we think about. We think there's some interesting areas and opportunities, like there's certainly the need to do more therapist provider training and education, whether that's shifting to venture-backed business or not that's another question, but there's an opportunity there.

0:20:11.6 AE: There's opportunities on some of the infrastructure piece, whether you're at the tech layer or other things, but I think it's a lot less clear with this proliferation of new entrants into the space, whether there will be a big winner being created today.

0:20:27.4 PA: Yeah, COMPASS Pathways, a few months ago, had a massive IPO where they... I think they IPO-ed at 1.1 Billion, and then they're now up at... I don't keep track... Super close, track.

0:20:41.2 AE: They were priced above their range at $17 a share, and the share price has more than doubled since then, which I think is really interesting. And I think none of us are exactly sure what is happening there, it seems to trade on a lot of things, not always related to the news. There was obviously some pent-up demand and interest in the stock. I think when I spoke with other institutional investors or even underwriters as they were going through that process, you still had a lot of skepticism about these being criminalized substances and when you went a layer deeper and actually talked to what they call the KOLs, the key opinion leaders or researchers in the space who were not involved in COMPASS studies, but had the chance to go through their actual data, you would hear things like, "I have never seen results like this before in my entire career. Even if they deliver half of this, it will be game-changing for the field of mental health."

0:21:39.2 AE: And the quality of those endorsements were so strong, but I think so many people couldn't see past that headline, and for better or for worse, the public commercial success of COMPASS's stock offering, I think changed a lot of people's view and suddenly... Frankly, we've seen institutional investors going to names that I think are less credible and shouldn't really be commanding the valuations that they're commanding or have that type of investor appetite, but it really opened that door for people to say like, "This is a legitimate space for institutional investors," and you really... You open the flood gates.

0:22:19.2 PA: Yeah, I think at this point in time, when we're recording this, COMPASS is the only company that IPO-ed on a US stock exchange, they listed directly in the NASDAQ. Almost, I think, every single other company has listed on the NEO, which is the Canadian stock exchange. And there are a couple that are looking to uplist into NASDAQ at some point this year, early next year, and the two that I know of are both biotech companies as well. So it seems to be a very sort of biotech-focused public play with this. And when I was sort of... Actually, this is a great question to ask you; why is it or how is it that a company like COMPASS Pathways, which has its pre-revenue and revenue won't probably be coming until 2024, 2025, how does a company like that then have a $1.5 to $2 billion valuation. Where does that come from?

0:23:07.6 AE: So I remember a couple of years ago now, so it was still very early on when I talked to the first... I think the Wall Street Journal was actually doing a piece on the psychedelic space, and the reporter was like, "I don't know how to value this market, can you give you some help on sizing the market?" The way you size a market like this, is you say, okay, well, you can look at the size of the problem, and you can look at today at comparable treatments. Abilify, they had over 5 billion in annual sales at the peak of the sale of that drug. If you look at CBT or cognitive behavioral therapy, which is evidence-based treatment, top therapy treatment for mental illness, that's also over 5 billion spent every year in the United States alone.

0:23:49.1 AE: If you look at comparable companies like Sage Therapeutics, which is developing drugs for major depressive disorder, postpartum depression, at one point, they were valued that over $7 billion, they had a... A drug... A failure in one of their trials, but they were valued on that potential at over 7 billion dollars. So if you look at any of those comparables, you can quickly get to... If you see a drug that, although they're doing their trials in treatment-resistant depression, and they chose that very carefully, because those are the people that most need, those are people who have been failed on at least two other treatments, and you know, some of the people in their trials have not been well for 40 years and they were having trouble leaving their house for 40 years.

0:24:29.2 AE: You can make a big impact. Those are also the most expensive patients for the medical system. So those are the easiest people to start to serve, but as we talked about earlier, the number of people and the number of conditions, and frankly, even the early research, not FDA trials but the early research on such a broad range of conditions shows potential for these substances that you could easily justify a really strong valuation. The other way to look at it is, what is the cost in incidents of mental illness in the world today? The WHO says that the mental health disorder burden counts for 15% of the total burden of disease around the world. How big is that number?

0:25:12.5 AE: Even opioid use disorder, we didn't even talk about addiction, which is a big piece of, I think, our potential market here, which is exciting, given the lack of good treatments right now. You can easily quickly get into double digit billions of dollars in terms of market potential.

0:25:28.0 PA: Yeah, and that's what I remember hearing, it's something around, what's the addressable market? Which for mental health disorders is in the hundreds of millions, 500 million, 600 million, 700 million, and now going up, up, up with COVID. And then what's the efficacy of the treatment and trial for that as well. So for something like, let's say MDMA for PTSD, and I know this was just phase two trials, but it was curative for 70% of folks. So if you have, I think, 25 million people who have PTSD and it can cure 70% and you have a treatment that's $15,000 and you have some sort of estimation about what that... That could become... Right?

0:26:08.5 AE: Exactly.

0:26:09.3 PA: And that brings up another interesting point within the psychedelic space, which is this sort of relationship between non-profits and for-profits. So, what's your take on that? What's your approach on that? 'cause just speaking from my own personal opinion, this is one reason why I continue to be skeptical of the patenting drug development approach, because, from my perspective, for every company that is trying to patent a specific psychedelic molecule, you have a Usona which is run by Bill Linton who is the CEO of a billion dollar pharmaceutical company called Promega, he's taking a lot of that funding and putting it into Usona which is a non-profit. They have open-sourced the synthesis of Psilocybin, which is exactly what COMPASS is trying to patent as part of their IP and valuation strategy. MAPS is a public benefit corporation as well now, but all of that funding is going into the non-profit, they have MDMA for PTSD. And it feels like... And this gets back into some of the fundamental values, but for every company that tries to patent a certain psychedelic molecule, it feels like there will be a non-profit that tries to do the same. How are you approaching that? What's your sense of that? In talking with investors, what's coming up with that?

0:27:16.5 AE: Yeah, look, I mean, I think those are all fair questions, and I care about safe and scalable access and getting these treatments into as many people's hands as quickly as possible. That's my overarching goal. And by the way, I also... I am a supporter of the philanthropic, you know, the non-profit space as well, so I'm not just investing on the for-profit side, I think they're all important and have different roles to play. And I think that the private sector approach will be faster, more sustainable from the standpoint that fundraising is a lot easier in the for-profit sector, although it can obviously have it's challenges versus the non-profit sector, you're not cannibalizing those charity dollars. And I think that there is a place for the non-profit sector, and that place is sort of where MAPS started out when you weren't able to attract for-profit business dollars to the space. So if you... And we can talk about whether going through the FDA system is the right way to bring these drugs to market or not, I happen to believe strongly that it is, but if you take that as the basis of your conversation then that costs at least 300 million plus dollars to do so. And to do that via a non-profit vehicle is incredibly expensive... I mean incredibly difficult and kudos to Rick and he is a superstar, and I can't say enough good things about him.

0:28:26.9 AE: And when he started MAPS, that was his only option. Right? Not that I think he would have gone another path necessarily, but it was really important for the non-profit space to exist at that time because nobody else was going to fund those trials and fund that research. So I think there's still a role there, but there's always gonna be a concern when somebody tries to monetize a public good like this, and it's an important treatment. And especially, in this case, where people say it's freely available in nature, so why can anyone charge for this? But the treatment obviously is not freely available, and I think the companies that we've talked about here have spent a lot of their research dollars and time and even MAPS has on creating, what is the right process and setting, the trained facilitators, all of that is part of the treatment and that's a service, not a product. So that's one piece of it. And so I think that it's important that we do go through this FDA process, I think the standardization is important, I think the credibility that you get...

0:29:28.9 AE: I talk about a good friend's mother who was dying of cancer, who was experiencing incredible existential anxiety, and I wished for her to have this experience, I know how strong the research that had come out of NYU and Johns Hopkins on this was, but she was never going to take something that was not FDA approved, right? So there's a lot of reasons, obviously, the FDA was established to avoid pharmaceutical disasters like we've experienced in the past, and is also an important part of the access question. Where I think one of the important things in my overarching goals here to make sure we have access to as many people as possible, is that you need to get the payer system involved, you need to get insurance companies, government payers, et cetera involved, and to do that, you need to have really rigorous clinical data, and FDA approval. And so I think it's important for all of those reasons.

0:30:20.0 PA: And that's, I would say, a really good balance way where you're both understanding and acknowledging, hey, these are some of the benefits and upsides to the non-profit and to... There's some benefit, an upside to the de-crim measure. And that's the thing about psychedelics is they touch all aspects of our systems. Our conversation is particularly focused on mental health, on wellness, on the healthcare system, and we also know that there's a role that it plays in the policy around drug war, there's a role that it's played. In the environmental movement, there's a role that it plays in business, which we haven't even spoken about yet.

0:30:51.1 PA: But a lot of investors not only like to invest in psychedelics, but also do psychedelics themselves to help with creativity and vision and innovation and all these sorts of things. So I'm totally on board with you. And I think you made a couple of good points which I hadn't thought of before, which is one; cannibalizing charity dollars. I loved that. In terms of, "Okay, if we can get investors from a for-profit perspective behind this, then that sort of creates the door or the opening to have more conversation to generate more legitimacy." And then also the second point, which is that a lot of folks won't actually do this, so to say, unless it is FDA approved. There's all of us sort of pioneers and early adopters, if we look at the sort of typical bell curve which are more than willing to go in and try this and say, "Yeah, for science." and all that, but to be honest, most people in the Midwest... I'm from the Midwest, I think of my mom as well, won't actually do this, unless it was with a doctor, in a clinic, specific for a clinical indication, and then they feel a certain sense of safety and ability to go forward with it.

0:31:52.8 PA: So I think those are all super relevant points, and that's what I love about the psychedelic space is it's not either, or, it's not either non-profit or for-profit, it's not either FDA or de-crim, but it's really a both, and philosophy that to have a successful movement, we really need to look at what are all the options that are on the table and how do we ensure we're collaborating in that process. And I think that's what's been so great about the psychedelic space is by and large, it appears to be very collaborative in nature.

0:32:19.7 AE: Yeah, I think so. I mean, look, there's definitely... There's politics, right? And I wanna be clear that I'm not defending our current medical system, I think our current medical system is broken like, you know, hopefully not beyond repair, but in the most awful way. We spend 18% of GDP on our healthcare system, and yet we have the worst healthcare outcomes amongst develop nations. So something is absolutely broken and we need to fix that. But I think that our FDA regulatory system is best in class in terms of going through the right procedures for safety and efficacy. And I think that is an important role for them to play. As you probably know, the Psilocybin and a mushroom can very... 10x from one to the other and we're talking about people who have a real need, it's good to have that level of standardization and safety that the FDA will insist on.

0:33:08.8 PA: So you had mentioned a couple of times in the conversation, Cannabis and how Cannabis is similar to psychedelics in a couple of ways, but by and large, it's very different. And you haven't invested in any Cannabis companies from Able. Why is that? What's sort of your take on Cannabis and how it defers from psychedelics?

0:33:26.3 AE: I mean, a couple of things on Cannabis, I think obviously, Cannabis is a consumer product, and these are services. So that... There's a different investment thesis. And I think Cannabis has gone more of the recreational route for the most part. And I do think that there are... Relative to other pain medications, relative to other sleep medications, there's a lot of good arguments for Cannabis. I do think that the risks have been under-sold, and if you talked to some of the leading researchers, particularly when you're talking about adolescents of which I have four children, so I'm always very careful about these. It does, unfortunately, where psychedelics could potentially precipitate a psychotic event, but it seems to, as far as we can tell, and, it's again, why we need FDA trials and studies, it doesn't seem to precipitate them in people who would not be otherwise at-risk, Cannabis usage and the amount of usage is correlated with actually new onset psychotic events.

0:34:21.2 AE: So that is something that exists in the medical literature and I don't think that's something that we've talked enough about when you're 18 or 21-year-old could go into a dispensary and buy something. So for a bunch of those reasons, we've decided to stay away from the Cannabis space. Again, I don't wanna vilify it, I think it's better than a lot of the other treatments that we have on offer for certain conditions, but I think we are more interested, although we're interested in wellness more generally, in this space in particular, we're interested in the cases that are more sort of clinically diagnosed.

0:34:52.8 PA: Which also brings up another interesting edge case, which I wanna get your perspective on, especially as someone who's strong in the CPG space with Four Sigmatic and MUD/WTR and Goop and Bulletproof and a few others, the sort of edge case in all of this, and this is something that we've talked about at length privately as well, is microdosing. How sort of microdosing as a concept mimics some of the CBD elements of Cannabis, although there are significant differences as well. There are quite a few companies that are talking about, for example, nutraceuticals, where they'll sort of put Psilocybin into various food products or drink products or whatever it might be, to sort of integrate it into it.

0:35:28.3 PA: I obviously have a lot of experience with microdosing, we talk a lot about it through Third Wave, we've done some research, there's more clinical research coming out around microdosing specific to depression and ADHD, my personal opinion is that mainstream adoption will be slightly different from microdosing compared to high doses of Psilocybin. Though obviously, we need more research on microdosing, but it feels like a lot of people start microdosing because a friend or a family member said, "Hey, this helped with X, Y and Z, you should also try this." And then there's not the same sort of ego defense with microdosing, 'cause it's receptible, it's a bit more less noticeable. So how do you see microdosing from a CPG perspective, from a psychedelic perspective, from, you know, all those sorts of things considered?

0:36:12.7 AE: Yeah, I mean look, first of all at Able we only invest in things that are going through the legal regulatory systems in the United States. So clearly right now, that's not happening, there are some companies that are doing trials. I think that as you sort of touched on, we don't have actually a lot of good data on microdosing yet. I think there's been a couple of peer review published trials and they were a little mixed so far. But if you go to Silicon Valley, it's their new Adderall, it's a performance enhancing drug, which I think is interesting, and definitely will fuel adoption to your point of, if somebody is talking to their friends about it. I think that from a CPG perspective, and I have already been pitched on the Psilocybin coffees of the world, Psilocybin gummies, and I don't think those should exist. I know we've talked about how do you make sure somebody's not just taking 20 of these and giving themselves an actual macrodose experience, which I think is a risk. Because the risk of a microdose versus a macrodose is very different, and I don't think those mechanisms are fail-safe yet, and I don't think... You know, or full proof, so I don't think we're ready to do that yet.

0:37:20.5 AE: That would, of course be a much larger market, so I understand why people are so interested and it touches more on the optimization side, although I do think that... I think what's really interesting... Again, some of the really early research being done on psychedelics right now and Psilocybin in particular, is around their anti-inflammatory properties, around their immune modulating properties. There's a lot of things... They are the ultimate adaptogen. I remember when we first invested in adaptogens and a very successful CPG friend told me that, "Those are crazy and nobody will ever buy them," and now they're the largest...

[chuckle]

0:37:52.6 PA: They're big.

0:37:54.7 AE: Yeah. Fastest growing category. So I think that it is interesting from that perspective, but I would say we have a lot more science and research to do before that enters any sort of... Or should enter any sort of a mainstream adoption.

0:38:10.8 PA: Yeah, it's a tricky beast, just being at the forefront of it myself, because I know that there are a lot of companies in Canada, as an example, that are popping up and just selling this online, because the Canadian government really is not doing much, if anything. Now, I don't know if that would fly in the United States necessarily, there seems to be a little bit more tightness around that, but obviously in a place like the Netherlands where Psilocybin truffles are legal, there's even a couple of public companies that are now opening growth facilities and rolling out microdosing packs and all this sort of stuff. So it seems like there is that huge opportunity, but of course the big question is the legal restrictions, because even in places where it's decriminalized like Oregon as a state just decriminalized all drugs, that doesn't mean that you can legally sell a microdosing supplement.

0:38:54.5 AE: Understand the difference between decriminalization, right? Also in Oregon, I think they actually have a really interesting initiative where they're taking on more of the regulated side, they're taking those two years to decide, "How do we design a system where this is rolled out in a really safe and effective way?", which is interesting. Look, I think for sure there's gonna be a lot of movement in the microdosing space, if as a CPG investor, that would be naturally where your mind would go because you can see that... One of the things people say about psychedelics, which is true relative to other types of medications, you're not being hooked for life, hopefully. It's not necessarily a one-and-done, 'cause I think that's also a misperception that's out there, but in theory, this would be an episodic treatment, certainly not for most people an every day treatment, putting aside any work that could be done on microdosing.

0:39:41.3 AE: And so I think there is a lot of interest and excitement around something that could be more regular usage. But I think that also goes back to the business models, and I think as I started to talk about earlier and maybe didn't finish this thought, I think one of the interesting things that COMPASS Pathways will have to be the leader in figuring out, and I think people maybe aren't fully aware of, is how do you price for these episodic treatments? What is the right way to deliver care for a completely new paradigm like psychedelics? And I think one of the interesting models to consider are these value-based care models, which are starting to be seen a little bit more in the healthcare system, and I think that should be sort of the future where instead of being paid per procedure and per treatment, you're actually paid based on outcomes like, "Let me take responsibility for the mental health of this population, and whatever that entails, I will do and I will be compensated based on making sure that the mental health of this population improves or doesn't decompensate or whatever the metric or measure is."

0:40:39.1 AE: And in the case of psychedelics, I think that's interesting because it really speaks to how these need to be integrated into patient care more broadly, which is to say, when I talked about those lifestyle improvements that you can make and that could be catalyzed by your psychedelic experience, that could all be part of your treatment. It's the preparatory work, it's your actual dosing session, it's the follow-up integration sessions, maybe more therapy, it's adopting a better eating habits, it's adopting exercise, maybe a contemplative meditation practice, something like that, and then monitoring those patients and saying which ones at what point in time, maybe need to come back for another treatment, but you're being paid to keep these people well instead of being paid to administer a treatment to these people. And I think that's just a totally different way of looking at things, and I think that is where healthcare should be anyway, and I think that psychedelics companies have opportunity to start to mainstream that a little bit.

0:41:35.8 PA: Are there any companies outside the psychedelic space that are looking at that right now in terms of the value care model?

0:41:41.5 AE: Yeah, there are, there are businesses that take a value care model, there are companies in the addiction space and other spaces, but it's... You've got a whole system that's built around making money one way, and you have to just change the entire... You have to change the entire system, which is slow-moving and entrenched, and you have a lot of entrenched interests to be able to look at things that way, but I think that would do a great deal towards both reducing the cost to the system as well as improving outcomes, which are the two areas that we're failing unfortunately at the same time right now in the US.

0:42:14.6 PA: And one other thing that you didn't mention was the importance of community as well, which we haven't yet talked about today, but a lot of the healing comes from connection, which is now again, being amplified because of COVID. And it's interesting what both COMPASS Pathways and Usona have done lately is they're opening up centers of excellence. I think that one for COMPASS is in Maryland or Baltimore or something like that, and then Usona is opening one in Madison in Wisconsin, and essentially, having spoken with Usona and sort of aware of the PR that's around COMPASS, these seem to be physical places that people will consistently come into to not only have potential treatments, but also to connect and share it with other communities.

0:42:57.0 PA: And this sort of goes into the point about what are the new religions and what are the new churches, and it feels like there's an opportunity to integrate a value care model, to integrate elements of community, to integrate... 'Cause a lot of what psychedelics offer as well is meaning-making and purpose, and people feeling like they're part of something bigger than themselves. So that's also, I think, a huge opportunity that right now isn't what we talked about in the psychedelic space, where are people hanging out? Who are people connecting with? How are we creating stories and narratives to connect folks through this medicine? And really the medicine, the Psilocybin or the MDMA or whatever it is, is really the opener, or the catalyst that the real healing comes from the sort of being together and the connection part.

0:43:35.3 AE: Yeah, I mean, absolutely, and I think for... At Able Partners, one of our... Two of our core areas of focus are community and search for meaning, because both of those, I think are critical to any sort of mental or overall wellness effort. So I think you're obviously aware of synthesis and some of the research that they did with Imperial College London showing that sometimes group administration actually can show increased benefits over individual administration, and I think it really depends on what patient population you're looking at and a ton of things, but having a close friend who did do a synthesis retreat is sort of amazing.

0:44:16.4 AE: Not a very outgoing person who went there, maybe not the best mental state of her life, came away, actually having built a little community over the course of just a few days with that group that continued to stay in touch. And I think when you go through something intense together like that, that's obviously a bonding experience, but to your point, definitely part of the curative potential or healing potential of these substances is you can build a community around that. So I absolutely agree with that. And the search for meaning and the need to find something meaningful in your life is obviously a hugely important piece and maybe slightly indirectly, but certainly a lot of people are led there by their experiences with psychedelics.

0:44:55.3 PA: So in terms of the next three, five, 10 years, what's your take on how you see this space rolling out? What's your take on the vision for what could develop? And how does it intersect with the wellness gap that you talked about at the beginning of the podcast and closing that wellness gap?

0:45:12.3 AE: Yeah, I think that we'll see certainly in the next five years, you'll see actual legalization, hopefully at the federal level, of a few of these compounds, and so then we'll be in the hard work of, what does delivery like. In five years, I think we'll still be figuring out some of that piece, how do you get this to the most number of people possible. I mean you can see it today, looking at this vaccine rollout, and how even though you've had every single government agency and as much firepower as possible focused on what is really an existential threat, getting two shots on people's arms is turning out to be really difficult, and when you're talking about scheduling several therapy sessions on top of a full-day experience, you can only imagine that the logistics of that are going to be challenging, especially in a population that might be in a place that they're having trouble following through on things. So I think we'll still be in that space, but I think there'll be a lot more excitement. I think people will have seen the potential of these compounds now, maybe in people that they either know or have heard of and respect, I think you'll see people talking publicly about it. And I think right now we have sort of the monotherapy of Psilocybin that's going through that process.

0:46:23.2 AE: ATAI is obviously more of a platform, and they are working with many different compounds targeting more specific indications. So I think you'll just see the continuation of that where both existing compounds going through a regulatory process, the creation of new compounds that are combining some of the best elements of existing things that we know about. I think you'll just see, hopefully a renaissance in the psychiatric space in terms of drug development, and you'll probably see from a business side, large pharma companies who are realizing that their current drug pipeline is incredibly anemic and that their current money makers are going off patent, you'll start to see them really pay a lot more attention, probably M&A activity in the space as well.

0:47:08.4 PA: Do you think that will work in terms of a traditional pharmaceutical company acquiring a psychedelic company? 'Cause it feels like to me, the psychedelic approach is so different from the typical pharmaceutical approach that it would almost cannibalize their business model from the inside out. How would that relationship go?

0:47:25.0 AE: I mean, I think it'll be very... It'll be challenging, but they certainly have the core competency in the marketing piece, which is also probably one of the major problems in our medical system today, but they are going to need to think about what does their... You had j&j do spravato, which is almost starting to get you to the place that psychedelics are, so you just see them willing to adapt, and I think when they realize the size of the problem, their lack of solution, they're going to have to either just... If they want to be in the CNS, the central nervous system disorder space, they're going to have to take seriously these innovations and this progress because there isn't that much else going on.

0:48:07.4 PA: So as a final question, to go into a little bit, something we haven't explicitly talked about yet but we've sort of touched on a little bit is this this product, this relationship between the product and the circles, so we've talked about how Cannabis is a product, we talked about how CPG is a product, and we've also talked about how VCs, firms generally look to invest in companies that can scale, and the sort of running joke with a few of my friends is it's not a real pitch deck if it doesn't have a hockey stick. So we always want that sort of potential huge growth. Now, I read a tweet by Eric Weinstein, and you probably know of Eric, he's a managing partner at Thiel Capital, and he brought up about the dysfunctions of current institutions, and the dysfunctions is that every current institution has an embedded growth obligation, which coincidentally spells out ego. So there's an embedded growth obligation, so we have to have these things grow and grow and grow and grow. So just from that perspective, if we're looking at products which are obviously infinite growth potential, and they can be, for example, for microdosing, nutraceuticals, they could be for other things.

0:49:13.7 PA: Services are a little bit more difficult, because to scale services, that's purely a human capital thing. How do you see sort of that relationship between products and services in the psychedelic space? How do you view that from an investment perspective? Does that make it less attractive from an investment perspective? What's the sort of nut there that you think is good to crack or discuss or talk about?

0:49:35.8 AE: Well, I think a couple of things, you're sort of touching on one of my pet areas of interest, which is that venture capital should not be the be-all-end-all for all businesses. A venture capital is a very specific funding source, and with it comes a lot of obligations and a lot of opportunities, but the baggage there is that most venture capitalists, and I would say we're a little bit different this way, but most venture capitalists bet on companies expecting that the majority of them will fail. And in a way, taking a venture capital company, taking that venture capital money may actually push you more towards the failure side, the sort of the "Go big or go home", like "Shoot for the moon and don't land in the stars, you're gonna land back on earth. We don't... That's not a good enough exit for us." Not to put down the entire industry of which I somewhat identified, but I do think that it's important. And I talk to the founders about this all the time. There are great businesses that are being watched that are maybe talking to venture capitalists and they say, "Why are you going this route? You don't... "

0:50:33.3 AE: It's tempting, right? 'cause you can get a big check easy and, may not easily, but you can get a big check upfront where it would be hard to get that amount of capital in one fell swoop otherwise, but there are other ways to grow your business. Even if you're talking about crowdfunding campaigns, an Indiegogo campaign, or you're talking about some friends and family money where they will have different growth expectations, maybe you're funding yourself through sales or pre-sales, like a crowdfunding option. So I think a lot of people need to stop and ask themselves like, "Venture capital might not be a right fit for my business," or in some cases, I talk to founders who are only looking to talk to certain types of venture capital, but in general, the way that that business works is that they are underwriting that you need to be able to have a 10X outcome because they know that most of you will fail, and therefore the ones that succeed need to make up for the ones that don't. So that's like a very particular type of business, and most businesses don't and shouldn't fall into that box.

0:51:28.6 AE: So that's the first thing I would say about that, and I think it's important that founders think about the pros and cons before going down that path. And then the scalability of the service side, I think it's absolutely, it's absolutely true and it's absolutely important to know, and there's also... If you're talking about physical locations where maybe you are administering these, that piece is capital-intensive, and your return on capital might be lower as a result because you're actually... You're signing leases and you're buying equipment, etcetera, which is not to say that those can't be high-growth companies or funded publicly, etcetera, I mean you see Field Trip, which is Ketamine clinics, which will probably ultimately also offer psychedelics when they're legalized, that has generated a certain amount of investor interest. We do invest in services businesses. We just invested in an autism clinic business called Springtide, but they're trying to use technology to actually improve both... Actually measure outcomes for the first time and correlate outcomes to the... In terms of what sort of therapy treatments they're getting.

0:52:34.1 AE: They're using technology to train and upscale their workforce. So there are certain ways to take physical businesses and maybe actually increase their growth rate with the use of technology, etcetera, but yes, you're right, it's a different risk reward profile than you would get funding simply a new drug development, for example.

0:53:02.3 PA: About a year and a half ago, I wrote a piece about why Third Wave became a public benefit corporation and talked about this relationship between unicorns and zebras, and I'll have to send you this piece afterwards, I'll also include it in the show notes for this, but how most sort of VC-backed companies are oriented towards becoming this unicorn, the 10 to 40 times growth, the hockey stick like, "Let's grow and expand," and how in fact that that can be somewhat cancerous because exponential growth can be cancerous. That's sort of the definition of cancer. And that the other point... And I got this from a Medium post actually, which we'll link to the original as well.

0:53:37.4 PA: The point they made in that post was that unicorns are not real as well. Unicorns are fake. So to call something a unicorn suggests that it might be out of touch, out of harmony with how life actually works. And so they sort of compare that to a zebra, zebras are collaborative, zebras work together, zebras are real animals, and a zebra is sort of a public benefit corporation, a corporation or a company that looks at social impact, that's not so much focused on, "How do I go from zero to a million within three years?", but is much more focused on, "How do we actually, over the course maybe of 30 years, organically grow and develop to really help to solve a significant problem, to really help to serve a significant community?" I think a really good example of this would be Patagonia, which started in the mid-'70s. They were just selling things to help climb mountains, then eventually, bit over bit, it grew and developed into this really beautiful company that's now at the forefront of protecting our land and everything.

0:54:37.0 PA: So I think that's another interesting way to think about it. And that's always been my hope personally for the psychedelic space. That's been what we're continuing to develop with Third Wave, what I see is happening at Synthesis, even though I'm not as involved with Synthesis, is how do we build and grow companies that we don't necessarily just wanna shoot and grow as big as possible so we can sell to a pharmaceutical company, but it's really like we're doing it for the sake of doing it. We're doing it for the sake of creating it. We wanna produce value, we wanna help a lot of people, but this is much more of a long-term trajectory, 10, 15, 20, 30 years rather than how do we just grow as quick and as fast as possible without worrying about what some of the second and third consequences are. So I think this is important to consider in terms of how psychedelic companies can actually change the way that we do business rather than just making psychedelic companies fit into these old models of how we've done business in the past.

0:55:32.2 AE: Yeah, good point. I look forward to reading that.

0:55:36.7 PA: So Amanda, thank you, thank you for coming on, thank you for sharing everything, all the insight about investment about how and why you've started Able, about where you've decided to allocate funds, about your perspectives and wisdom specific to the psychedelic space. If listeners just wanna find out more about your work, find out more about Able, find out more about anything, where can they go? Where can we point to?

0:55:57.2 AE: Ablepartners.nyc, and there's a link on there to our Medium where we published a few pieces about how we're thinking about different areas.

0:56:07.9 PA: Beautiful. Well, it was lovely to connect. Any last words or any final things that you wanna share with the audience?

0:56:12.0 AE: I think you covered it. Have a great weekend.

0:56:16.1 PA: Great. Thanks so much.

0:56:17.8 AE: Thanks, Paul.