Abridge’s Shiv Rao: Taking On Microsoft To Cure Doctor Burnout With AI
A cardiologist turned founder, Rao says he's building an operating system, not an AI scribe. He's got 300 health system customers spanning 250M Americans -- and a lot of competition.
As a practicing cardiologist – he still sees patients one weekend per month – Abridge co-founder and CEO Shiv Rao can speak from experience about doctor burnout.
“Nothing crushes my soul more than clerical work,” he says.
But it’s his wife’s experience as a patient that sticks with me more when he brings it up toward the end of our chat on the newest episode of The Upstarts Podcast.
The couple already had a healthy daughter when they found out about a rare disease in the family, and after genetic testing and some tough luck (we’ll leave that to his own words in the episode), decided to proceed with in-vitro fertilization to ensure it wouldn’t pass on.
For three years, Rao says they spent his “overpaid corporate VC salary” traveling around the U.S. from their Pittsburgh home for doctor visits. (“We’re so lucky and we’re so privileged that we could even afford that, and we don’t take it for granted,” Rao notes.)
“I’d be there, and the doctor, or the counselor, would leave, and we’d look at each other and be like, ‘What did they just say?’ Like, ‘What are we supposed to do?’ And I’m a doctor. I can’t even remember.”
The story has a happy ending – they now have 10-year-old sons, identical twins – but it speaks powerfully to what Abridge is trying to achieve: “Finding a way to help both the patient and family member, but also the clinician, feel like they can do and be their best, is really at the end of the day what this is all about.”
Of course, there are lots of business reasons to pay attention to Abridge. Founded in 2018 by Rao and two others with deep Carnegie Mellon ties, Abridge is a first mover among the newer generation of AI-enabled healthcare startups, serving more than 300 health systems that reach 250 million Americans.
Active in AI long before ChatGPT, Abridge recently partnered with Nvidia in its model development, and with Eli Lilly in pharma. It’s raised nearly $800 million to date, achieving a $5.3 billion valuation last year in a round led by a16z. A host of other firms, including Bessemer, CapitalG, IVP, Lightspeed, Redpoint, Spark Capital, USV as well as strategics from Alphabet to CVS Health Ventures and the Mayo Clinic are also on the cap table.
Initially taking on Microsoft’s $20 billion Nuance acquisition, Abridge competes in a big market identified as ripe for AI impact by seemingly everyone. A challenger, Ambience Healthcare, has raised hundreds of millions of its own from investors including General Catalyst, Kleiner Perkins, Sequoia, and OpenAI – and, perhaps controversially, also a16z.
Microsoft hasn’t gone away, and Epic Systems, the health records giant, isn’t turning a blind eye. Palantir has gotten into the hospital business. And in January, we wrote in Upstarts about how Anthropic and OpenAI have made concerted life sciences pushes.
Is Abridge still the Upstart, or at risk of being disrupted? I was eager to ask Rao about it, after last sitting down with him in person at my final Cloud 100 launch event for Forbes in the fall of 2024: a stacked panel that included Rao, Anthropic co-founder Daniela Amodei, Perplexity founder Aravind Srinivas, and Scale co-founder and now Meta executive Alexandr Wang.
Taking Microsoft head-on in the early days, Rao tells me, was a “YOLO move.” Against other startups, Rao argues that no other can claim the same breadth and scale. “In some ways, we’re still creating a new category, yet we are still in a category of our own,” he argues.
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On this episode of the podcast, Rao talks about how an early bet on AI got Abridge going, before ChatGPT; why reaching scale in healthcare requires years of “eating glass” and “kissing frogs;” and why he thinks Abridge can help doctors and nurses feel like “superheroes.”
Plus, he shares his Upstart Moment: that “YOLO” decision to take on Microsoft, with his “one shot” to get it right.
Below, you’ll find my two favorite business lessons from Abridge for busy startup builders – plus my own perspective on Abridge’s battle.
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Speedrun at the boss
Around 2022, when Abridge was still just about 50 people, Rao says the startup walked through a “one-way door” to go after enterprise customers. That meant taking on the “huge bosses” of software working with them, and the obvious Big Boss was Microsoft and Nuance.
“It was a YOLO move. I think that’s why most VCs tell their startup to go down-market first, figure out PMF [product-market fit] with a small clinic, build something that the end user loves, and then swim over time upstream, and get that large system.
For a lot of reasons, including the amount of money we had in the bank, there was no other way. ‘Cause ultimately you have to get those big systems. That’s where 75% of the doctors in this country practice. If you’re going to build a big, impactful, legacy-leaving, generational company, you need to get there as fast as you can.”
That kind of move is ultra-high risk for a startup, Rao says now. Why? Buyers in big companies – be they CIOs, CISOs, or other similarly-titled execs – tend to talk to each other. They have WhatsApp groups.
“When they see something they don’t like, they tell each other,” Rao notes. Startups that blow it might get a chance to rebrand, or recap, and come back.
“You’re not going to get many shots. Probably not more than one shot.”
Abridge did make it work, though, and Rao says they did it by showing their full hand of all they were trying to build, and being clear about a much bigger thesis.
“It turned out being ourselves was such a counter-positioning advantage against Microsoft,” he says. “Just saying, ‘Hey, this is what our true north is; this is what we’re trying to build.”
The key slide in their presentation stressed that Abridge wasn’t about AI taking notes, but about a conversation layer that kept the technology out of the way. “There was something paradoxically profound about AI actually removing all of the other tech, or pushing it into the background,” Rao says. “People resonate with that.”
Rao’s startup advice: Take it all on, fast.
“I think some companies might feel that you can play a longer game, and I think on some level, you’ve got to play really long games, but the world is moving so quickly right now, that it’s hard to triage. It’s hard to say, ‘This is tomorrow’s problem’ anymore. Everything is kind-of today’s problem.
And you’ve got to be so forward in terms of making clear why you’re different, and in healthcare, how you’ll be a 10-year, a decades-long partner for them. The urgency, and the emergency, the level of existential crisis you get to at moments in a company, just force you to focus, and do the thing you have to do.”
Own your destiny (AI stack)
Abridge announced its partnership with Nvidia last month, with the two announcing they would train a new AI model to be used exclusively by Abridge for documentation and clinical decision support, per the Wall Street Journal.
When I ask Rao about it, he describes the partnership as answering a more basic question: “We’ve got this incredible proprietary data set. What else can we do with it?”
Abridge’s hope is that it can maintain a number of agents for each doctor, around the clock, without breaking the bank. That means Abridge has to be “very careful” about how it uses frontier models from the big AI labs, Rao says.
“On any given week, 40% to 60% of our model outputs are probably driven by in-house work,” he says. Abridge has put a lot of work into its model routing, orchestration and evaluations to ensure that it’s only sending the most difficult problems to expensive models.
“This is the operating system for every single AI company out there. If you do a really good job of that, you’re going to deliver a better product, but you’re also going to be able to compete with your P&L [profit and loss] as well.”
Rao expects the question of frontier model costs to only heighten as Anthropic and OpenAI go public and face other priorities. “The companies that can reach down lower into the stack, the ones that can really own and control their own destiny, are going to be able to separate.”
That said, Rao expects Abridge to partner more closely with the labs like Anthropic and OpenAI over time.
“The moment that we feel like we’re going against the grain of what is absolutely incredible about this moment – how fast things are changing, and how profound this platform shift is – if that ever happens, we’re screwed.”
Advances from the AI labs need to “feel like a tailwind,” Rao says.
“When they do new things, cool, awesome. We evaluate. We see where we should point those models, and then we’re delivering a better product experience on some level, but we’re also getting all of the edits and adjustments. We’re getting the feedback loops.”
The need to decide which tasks end up where, and which Abridge should distill or fine-tune itself, won’t go away. Startups building vertical AI tools, or AI-enable software, will always be riding the wave, Rao believes: “I think it’s going to be that sort of orchestration, or portfolio, approach to models that’s going to win the day.”
Alex’s take: It’s not all about the money
One company that never came up in our conversation: OpenEvidence, which provides more of an AI copilot that helps doctors keep up with medical information and answer clinical questions. OpenEvidence is currently higher valued than both Abridge and Ambience combined, reaching a $12 billion valuation in a funding round this year.
A mix of investors from each of those companies are also in OpenEvidence, another sign, like a16z being in both, that this market is one prone to overlap. Above all, it’s just really, really big.
It can be hard to wrap one’s head around just how much money goes to healthcare in the U.S. A category accounting for nearly 20% of GDP that is embracing technology should produce a number of big winners, not a winner-take-all market dynamic. OpenEvidence partners directly with medical societies and works with doctors directly, giving it more of a bottom-up go-to market approach than Abridge.
That means its reach can spread faster, helping to explain its higher price tag; it also puts it likely on more of a collision course with the AI labs. (Short-hand of ‘ChatGPT for doctors’ adds fuel.)
Abridge is playing a different game, and while it may grow total users more slowly alongside a smaller valuation, that also makes it feel a safer bet.
If I’m an investor in either Ambience or Abridge right now, I’m likely feeling good about my chances of a successful exit, either as another Nuance-type acquisition, or eventually a public company like Veeva Systems, a life sciences software company I profiled in Forbes magazine in 2017, and which currently trades at a $30 billion market cap.
But venture capital is a Power Law business, and if you mention one or the other to an investor, or another founder, you’ll often hear a take on how they seem to be doing in comparison to the other. “Ambience is catching up fast,” a backer will say. “Abridge has widened the gap,” another will respond – “Surely, that’s why a16z lined up the money truck!”
In some areas of AI, the horse-racing style updates seem pertinent: engineers change coding tools fast, and who is winning in a given week can mean the difference between an acqui-hire or a $30 billion deal for SpaceX stock.
In this case, the competitive dynamics maybe sell the impact of this category short. Ultimately, these tools are intended to help fix a partially broken system, and deliver better care. Spend any time talking to, or even just listening to Rao in this episode, and I expect that you’ll believe it, too.