(We originally posted this in 2020. You can read more of our original ideas in our archive.)
Problem: One of my favorite newsletter writers, Packy McCormick, recently wrote a blog post about psychedelics (The Magic of Mushrooms). In it, he described some interesting statistics and insights:
According to a JAMA Network Survey, depressive symptoms have tripled during the pandemic.
The total direct and indirect costs of the mental health epidemic are expected to reach $6 trillion by 2030, up from $2.5 trillion in 2010, according to the World Economic Forum.
The Lancet Commission estimates that number to be as high as $16 trillion when you include the loss of productivity, and spending on social welfare, education, and law and order.
Despite the huge need, the last real innovation in the fight against mental illness was the release of Prozac in 1988.
22 million people suffer from Major Depressive Disorder, 100 million of whom have Treatment Resistant Depression, four million of whom are in the US
Solution: A company that invests in creating psychedelic-based treatments to issues like depression, PTSD, schizophrenia, and more. The wave of mental health technology (which includes companies like Calm) is on the rise especially as investors and potential founders realize that mental health is a massively underserved market.
There are a few companies in this space today. One is Journey, which Y Combinator President Sam Altman recently invested $3M into. What I find particularly interesting about Journey is their homage to indigenous communities; as Chowdhury has been quoted as saying “Mescaline was one of the first psychedelics that was isolated, synthesized and studied in Western research, keeping in mind that Indigenous groups have been using this safely in ceremony for many year”; thus, one-third of the company’s equity will be put into a pool for a diverse group of people, including Journey’s employees developing its programs, the therapists and caregivers who will administer the treatments, and the Indigenous communities to which Journey’s medicines trace their roots.
Psychedelic medicine could turn out to be one of the most important tools we have to improve mental health. Excited that @JeeshanJourney has launched a new company!
Since I’m not an expert in this field, much of this post will quote others who have written and researched extensively. Here is Packy’s reflection on why the market is one that’s extremely lucrative and actually still growing. As he writes,
After fifty years in the dark, though, psychedelics are once again getting the chance to shine. Led by public figures like Michael Pollan, Tim Ferriss, and even Joe Rogan, and leading institutions like Johns Hopkins, NYU, Berkeley, and Imperial College London, therapeutic psychedelics are going mainstream again:
On election night, Oregon voted to legalize psilocybin for mental health treatment in supervised settings. Washington, DC voted to decriminalize it.
The FDA granted Breakthrough Therapy Designation, which they grant to therapies that have shown great promise and clinically significant improvement over available therapies, to three trials using psychedelics to treat mental health indications, one with MDMA and two with psilocybin, the active ingredient in magic mushrooms.
Last week, Johns Hopkins released a new study that showed that treatment with psilocybin and supportive psychotherapy produced rapid and large reductions in depressive symptoms in adults with major depression, with a magnitude of effect four times larger than antidepressants’.
At this point, you might be thinking: dope. This sounds amazing. Give people shrooms! But this isn’t a healthcare newsletter. Not Boring isn’t Out of Pocket. Why are you telling me this?
In September, COMPASS Pathways (NASDAQ: CMPS) IPO’d and became the first public company with a psilocybin-based product. ATAI Life Sciences, a “biotech platform to heal mental health disorders” with a wide range of psychedelic-based therapies, recently raised a round from investors like Peter Thiel and Michael Novogratz and is expected to go public soon.
The industry is young, but growing, and could benefit from any sort of business model change, structured roll-up model, or even an established player taking a moonshot bet with a new project team. Some areas to explore in this industry include: psychedelic production, certification of guides, matching of individuals and guides, training on how to guide, etc… There are even opportunities to play in this market without actually producing or transacting without psychedelics through focusing on guides.
I would be surprised if in 20 years, this market is not one of the largest in healthcare.
Monetization: Sales from these treatments (since they will probably also require guidance during these meditations/trips).
Contributed by: Michael Bervell (Billion Dollar Startup Ideas)