Ex-DOGE staffers launch Special, a holding company bringing government efficiency playbook to private-sector healthcare

it's not a huge mistake, but a small medium-sized one, but I am fairly confident this is a mistake nonetheless. Well, we will dig into it more in the future, but our next guest is here in the waiting room. We have Nate Kavanagh from Special. He is the co-founder. Welcome to the show. both of you, please introduce yourselves and tell us about the company.

Hey guys, good to see you. Appreciate you having us.

Yeah, great to have you on.

Yeah, my my name is Nate Kavanagh. Uh Justin Fox is my co-founder on the line. Um

we today we were excited to announce uh Special, which is a a new holding company that we really view um as an extension of the work we did at Doge. So Justin and I worked together at the Department of Government Efficiency for the past year.

Yeah.

But we're now building effectively Doge but for the private sector. And so

we're focused on this 10 trillion dollar main street services economy which in in many ways of like the federal government. It's massive. It's inefficient.

Um and in a lot of cases is still funded in part at least by the government. And so we announced that today and excited to chat with you guys about it.

Do you have a particular industry that you want to focus on? Do you want to be general? I mean, I see this loosely in the bucket of management consulting, delayering, understanding inefficiencies. There's there there's a triedand-rue track record. I'm interested to hear how you're differentiating from other management consulting firms that might already be doing some of this work for large companies. Uh but then also I'm interested to know where you're focusing, where you see the most opportunity.

Yeah, it's a good question. I mean the the the main point of differentiation is uh there's two components to special business model. So special is developing a set of AI tools that we can apply to these main street industries. We're starting with healthcare and more specifically a bet on the aging population demographic of the US.

And so we identified that as our first vertical. We're actually incubating a new brand to become category leader and we're going out and acquiring these great independent small businesses and applying those AI tools into the businesses that then we will uh we will own forever. Yeah.

So we just to guess are these like Medicare related businesses

hospital or like a primary care or like a urgent care like what what are we actually talking about in terms of healthare?

The specific market is at home senior care. So it would be a nurse going to a senior citizen's house provide them with care in the home. It's the lowest cost way to provide care for senior citizens in the country.

And as I'm sure you guys have seen there's a lot of fraud in Medicare and Medicaid. We're focused on trying to provide the nurses, the critical workers in these industries with the best AI tools so that they can provide better care for for seniors.

And there's probably a lot of back office work that goes into scheduling and all of those things can be enhanced with AI tools, I imagine.

That's exactly right,

Jordy.

Uh yeah, why why a holdco? I'm curious like this feels like healthcare is like, you know, multi-million dollar industry

started. You guys sounds like you have a playbook that you feel like can be applied across different categories, but is healthcare not big enough for you guys.

Justin, you want to take this?

Yeah, look, first of all, it's great to be on with you guys today. Look, I I think

you know w with special at the top parent co and developing these AI tools, I think, you know, to limit sort of the expertise that we've learned from Doge and from um prior careers to just healthcare, I think would be narrow. You know, the point of having the parent co with engineering talent is that we can deploy into multiple verticals. And so, I mean, as as you can imagine, the main street economy is massive. And so, if we're just going to address healthcare, I think that's that's too narrow. And frankly, there's there's so many independent business owners that we're looking to problem solve for. So, Nate alluded to it, but you know, Figure is going to be or Figure is our newly incubated strategic brand in healthcare. And so that brand is going to inevitably be carrying the torch for these uh business owners through development of AI. So we're going to be working handinhand in the weeds with these operators uh to develop the tools that they need to succeed.

How do you think about uh the size of a company that you want to acquire and fold in? Obviously there's some organizations that have already been sort of rolled up. They're large. They're private. There's probably public companies that you could do a take private of at the biggest scale. There's also uh probably very small businesses with owner operators who might be getting older looking for liquidity like what is in your strike zone?

Yeah, it's a great question. I mean today we announced our new financing led by Andre and Horowitz and a lot of our Doge teammates, guys like Steve Davis, Antonio Gracius. We and we in that same announcement announced our first acquisition that's under contract. It's a it's a business that's doing we'll say tens of millions of dollars in annual revenue. They have about 1500 senior patients that they care for and about 200 nurses on the payroll. So, it's a pretty big business based in Texas.

Um, and we we have a pipeline of others that we plan to do. So, I'd say it's a business where it already has some u some management sophisticated sophistication and some real scale

um but is not at the scale of doing a public take private.

Yeah. Out of curiosity, how like is there significant like how significant is the back office like opex because I imagine like you know seniors want to be cared for by individuals. I imagine they don't want to just like jump on a a Zoom call and and get care that way. Um, so is is uh is this a play that you think you can use AI to grow the business much faster and you feel like there's uh significant sort of back office savings or like where do you think you'll get the most return?

Justin, go ahead.

Yeah, look, I I I think what we're not what we're not suggesting is that a robot is going to replace a nurse in in grandma's home. That that's not at all the case here.

Yeah. Look, I I think you know when we think about the the delivery of service, you know, if that takes up about 50% of the costs to pay your nurses, there's something like, you know, 40% of the remaining dollars are getting spent on a lot of administrative tasks that can be solved with AI. And so our view, you know, the way that we think about it at Figure is let's make the jobs of our back office team members easier and instead of what maybe a traditional PE or strategic would do, which is pocket those savings and and market a huge margin accretion, let's share those savings with our workers. So one of the things that's unique about this space is there's a massive shortage of nurses and caregivers. And so to the extent that you can be in a market and be able to pay your team the most, everybody will flood into your business. And so then you can provide care for this millions of Americans who sometimes don't have access to it. So that's the underlying thesis. I think it's share the pie, grow the pie with everybody and it'll help you grow and deliver better service.

And Jord to your point, this is the playbook that we plan to replicate across not just healthcare, but markets like construction, manufacturing, other very labor intensive, highly regulated markets that a lot of the learnings we had from Doge can then get applied back into the private sector.

Yeah. more leverage on the key workers that are doing the most important tasks, the things that are actually aligned with the mission and more efficient back offices.

Um, no sense.

You guys sticking with a 5day work week.

It's been a hot debate.

I got a feeling you guys might be putting in a few more hours.

I don't think we're as um we're somewhere between 5 days in and corgi. Uh I think is a

that feels healthy. That feels sustainable.

Jennifer of tattoos, I suppose. Never go a tattoo.

Exactly.

Exactly.

Congratulations and thank you so much for coming.

Yeah. Thanks for coming on, guys. Congrats on on the the the raise and I'm sure you'll be back on with more news soon.

Have a great rest of your day.

Appreciate it, guys. Thanks.

Goodbye.