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12 Rules for Health Tech Startups

By MATTHEW HOLT

Last week Mark Cuban tweeted out 12 rules for tech startups and Jessica DaMassa challenged a bunch of people to respond for health care. VC and general health care wit Lisa Suennen came out with quite the list (she got to 13) but I thought someone ought to write the real rules…

1. Never start a health tech company if you can sucker someone into giving you a real job

2. When VCs at conferences say raising money isn’t a problem, throw a milkshake at them

3. Never work with a technical co-founder who won’t give you the last M&M in the packet

4. When a clinician wants to quit their job and co-found with you, remember that the good ones could be making $500K a year reading X-rays and be on the golf course at 4pm

5. Do the 50/2 diet. Starve for 50 weeks of the year then eat and drink as much as you possibly can at HIMSS & JP Morgan parties when someone else is paying

6. When the incubator/accelerator/matchmaker says that they “chose you from 700 applicants” remember that there are roughly 700 of them and every company applies to each one

7. When you get the elusive partnership deal with the big hospital system, tech company or corporate, you’re going to expect to work at the speed of the startup and the scale of the corporate. It’ll be the reverse . (I stole this from Michael Ferguson at Ayogo)

8. After your first few clients and funding rounds you’ll be losing money at a exponential rate that matches what you had for revenue on the hockey stick chart in your pitch deck

9. Hopefully you’ll eventually be able to start making the money the health care way, by establishing a monopoly that can arbitrarily raise prices to the moon and stick it to your customers. If not, start prepping for the really big Oscar/Collective/Clover type round. 

10. Pray to whatever God you follow that Softbank is still in business when #9 happens.

11. If after a decade or so of slog, you finally get the IPO, or semi decent exit, try to ignore the fact that the Instagram guys sold for $1 billion 11 months after they founded the company

12. Hope that you can disrupt health care, but remember that UnitedHealth Group’s revenue is $220 billion and CMS spends $900 billion a year and they both appear mostly powerless to make anything better.

Matthew Holt is publisher of The Health Care Blog and advises startups at SMACK.health using these principles and a few others too!

The Coming Health Tech Disruption

Mark Cuban has been actively commenting in Saurabh Jha’s THCB post about him. We thought this comment was worthy of being a standalone post (and he agreed)–Matthew Holt

Screen Shot 2015-04-08 at 7.07.01 PM

The tech sector will leave people better off at a lower cost. Moore’s law will have its day. But we are 5 years off from minimal impact. 10 years off from Marginal Impact.

In 20 years we will all look back and think 2015 was a barbaric year of discovery.

To give perspective. We pioneered the Streaming Industry TWENTY YEARS AGO. And now we are finally seeing streaming becoming mainstream as a technology but it still cant scale to handle mega live events.

HealthTech will continue to move forward quickly with lots of small wins. It will slow down when there is an inevitable recession in the next 20 years, then jump again afterwards.

In 30 years our kids/grandkids will ask if its true that there were drugstores where we all bought the same medications , no personalization at all, and there were warnings that the buyer may be the one unlucky schmuck that dies from what used to be called over the counter medication.

We will have to admit that while unfortunate it was true. Which is why “one dose fits all ” medications were outlawed in 2040 🙂

By then hopefully we will have a far better grasp on this math equation we call our bodies.

Of course it will be long before then that we make decisions based on optimizing health rather than trying to reduce risk.

The biggest challenge will be training health care professionals.

Medicine today seems to be in that 1980s phase that tech went through where no one got fired for hiring IBM. So IBM got lots of business because it was the safe choice rather than the best choice.

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Radiologists vs. Mark Cuban on Don’t Ask / Don’t Tell

https://twitter.com/mcuban/status/583468799145349120

To his credit, Mark Cuban, engaged on Twitter in response to my post.

Mark, I’m sorry I had to leave Twitter abruptly. My wife threatened to kill me and then divorce me – in that order – if I didn’t get off Twitter instantly and get the groceries.

However, I caught the tail end of the Tweets. I’ll do my best to respond.

1. “Why is this contingency all radiologists?”

Mark wondered why everyone on a thread about overtesting were radiologists. It would be a great question if radiologists, who deal with testing, overtesting, limitations of testing, harms of testing, benefits of testing, appropriateness of testing, in other words the science of testing, would be offering advice on financial planning or offering the White House advice on their ISIS policy.

I can do no better than quote @jeffware.

“Exactly Mark – why are the Drs. who specialize in testing trying to explain the dangers of overtesting?”

That was a rhetorical question. But there are some entrepreneurial radiologists who are licking their lips at the epidemic of overtesting. I can hear them say “Mark and acolytes, bring it on.”

To wit, overtesting is better business for us. So our objection is not financially motivated. Let me make this even clearer. The more blood tests and genomic tests the “must prove that I’m healthy” brigade have, more $$$ for radiologists.

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A Business Proposal for Mark Cuban

Businessman and maverick, Mark Cuban recently opined “if you can afford to have your blood tested for everything available, do it quarterly so you have a baseline of your own personal health.” I’m unsure why he said quarterly, not weekly, daily or hourly. ‘ 

He further opined that this must be done to “create your own personal health profile and history. It will help you and create a base of knowledge for your children, their children, etc.” I assume etc. refers to grandchildren’s children.

I’m unclear what my grandchildren would gain from knowing my serum free testosterone levels in 2014. That’s a lot of data to enter in ancestry.com. For that matter, the size of my grandfather’s spleen in 1956 probably doesn’t affect the way I think about my mortality. That year he had a bout of Leishmaniasis, which, thankfully, isn’t a problem in Philadelphia.

Cuban further explained “a big failing of medicine = we wait till we are sick to have our blood tested and compare the results to “comparable demographics.”

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