Our day-to-day lives were reformatted when the consumer mobile wireless device era, beyond cell phones, was ushered in by iPods in 2001 and followed in short order by Blackberries, smartphones, e-readers, and tablets. Nurturing our peripatetic existence, we could immediately and virtually anywhere download music, books, videos, periodical, games and movies. Television is soon to follow. But these forms of digital communication and entertainment are a far cry from digitizing people.
This decade will be marked by the intersection of the digital world with the medical cocoon, which until now have been largely circulating in separate orbits. The remarkable digital infrastructure that has been built—which includes broadband Internet, cloud and supercomputing, pluripotent mobile devices and social networking― is ripe to provide the framework for a most extraordinary upgrade and rebooting of medicine.
When I was finishing my internal medicine training in 1982 the term “digital” in medicine referred exclusively to the rectal examination. Now, 3 decades later, there are 4 domains of what comprises digital medicine―genomics, wireless sensors and devices, imaging and health information systems. Each of these digital medical technologies are on exceptionally accelerated growth curves. In 2012, complete DNA sequencing of all 6 billion bases of a diploid human genome will be accomplished in 2 hours at a price well under $4000. Already DNA sequencing is having an impact in medicine for specific gene-drug interactions, targeting of cancer therapy by defining tumor driver mutations (comparing somatic versus germ-line DNA), and demystifying life-threatening idiopathic diseases. Just a few years ago wireless sensors got their start for consumers in the health and fitness space, with wearable accelerometers in running shoes, bracelets, necklaces or clips. Now a brain wave sensor can be used to continuously monitor one’s phases of sleep and wakefulness.Continue reading…
In any market where the number of new businesses triples in the course of two years, you know that something unusual is going on. (And make no mistake—most venture incubators are businesses, founded and funded by people hoping for real returns, whether social, financial, or both.) You naturally begin to wonder whether a bubble is forming, in the classic sense of an episode of vertiginous growth disconnected from economic fundamentals such as market demand. And since bubbles are, by definition, unsustainable, you wonder what’s going to happen when they pop.
If you ask me, there is clearly an incubator bubble. Whatever your opinion about the existence of a bubble in the larger world of Internet startups—Sarah Lacy and Dan Primack offered interesting, opposing views on that this week—it’s hard to imagine that today’s tepid consumer and business markets have room to absorb all of the products and services offered by the hundreds of new startups that the incubators are now churning out each year.
It’s a given that only a few of the startups going through the incubators will strike it rich while the rest languish or die—that’s the nature of the startup game. What I’m saying is that without higher-than-normal success rates, many of the incubators themselves could find it difficult to stay in business.
Here’s why. Most of these operations are organized along the Y Combinator model: they provide startups with $15,000 to $25,000 in seed funding and about 12 weeks of mentorship and product development assistance, and in return they take an equity stake, usually around 6 percent. They profit when incubated startups get big and successful enough to be acquired. (As far as I know there isn’t a single example of an incubated company going public.) Doing the math, let’s say you’re the founder of an incubator and you fund 20 companies a year at $25,000 each, in return for a 6 percent stake. To achieve respectable returns on that $500,000 you laid out—let’s say a 3x return, not even figuring in your operating costs and the value of the time you put into mentoring the companies—you need one of your alumni companies each year to achieve an exit in the $25 million range (or two at half that, and so on). And that’s assuming your stake isn’t diluted by later funding rounds. It’s quite a gamble, and I just can’t see the economics being very compelling for any but the largest, best-funded, most prestigious incubators—i.e., Y Combinator and TechStars.
Apparently, the secret to Silicon Valley’s success isn’t just the good weather and smart people – turns out, the secret to our region’s entrepreneurial preeminence just may be the way we embrace failure.
According to KPCB life-science (devices) partner Dana Mead – who notes he hails from the northeast — there’s a world of difference between Palo Alto and Cambridge (MA).
In Cambridge, he contends in a recent (and, as always, informative) lecture/podcast at the Stanford Technology Ventures Program, if you tell people your last three businesses failed, “they’ll look at you sideways” and shake their heads, presumably with a mixture of sadness and pity. In Palo Alto, by contrast, the reaction will be “that’s awesome! I’m sure your next company will be a world-beater.”
What does it mean to be an entrepreneur in health care?
Twice in the last two weeks I had the honor of speaking at Northeastern University’s Health Sciences Entrepreneurs Program. It’s a terrific program, dedicated to fostering the creation of health care businesses by helping the people who build them figure out how to do it. That it exists is a testament to how strong the American spirit of entrepreneurship really is – and how the 21st century economic engine is going to be health care.
But the hundreds of students and alumni who attended the events already knew this. What they wanted to know were the answers to more practical questions – how do I know if it’s a good idea to try something? What happens if I make mistakes, or fail? Do I really need to start a business to be an entrepreneur? What opportunities does the changing world of health care create?
They’re the right questions because they’re hard. Being an entrepreneur means you’re willing to look at the world as it is and want to make it as you think it should be. It means being willing to take risks, try new things, and not being afraid to fail. In fact, if you listened to the panels of highly successful entrepreneurs, you’d think failure was a big part of what entrepreneurs do. You can’t create something new without making mistakes along the way.
At the end, we were all asked to give one piece of advice to the budding entrepreneurs.
Mine was this: Do Something Cool. Always put yourself in a position where you’re doing something that is so cool you want to tell people about it. When you don’t think it’s cool anymore, leave, and find something else that you think is cool. Don’t worry about whether it means starting your own business or working with someone else who has. Put yourself someplace where you think you are changing the world.
If you can do that, you’ll be an entrepreneur.
Evan Falchuk is President and Chief Strategy Officer of Best Doctors, Inc. Prior to joining Best Doctors in 1999, he was an attorney at the Washington, DC, office of Fried, Frank, Harris, Shriver and Jacobson, where he worked on SEC enforcement cases. You can follow him at See First Blog where this post first appeared.
In your life, at work, in a design. You are probably solving the wrong problem.
Paul MacCready, considered to be one of the best mechanical engineers of the 20th century, said it best: “The problem is we don’t understand the problem.”
It’s 1959, a time of change. Disney releases their seminal film Sleeping Beauty, Fidel Castro becomes the premier of Cuba, and Eisenhower makes Hawaii an official state. That year, a British industry magnate by the name of Henry Kremer has a vision that leaves a haunting question: Can an airplane fly powered only by the pilot’s body power? Like Da Vinci, Kremer believed it was possible and decided to push his dream into reality. He offered the staggering sum of £50,000 for the first person to build a plane that could fly a figure eight around two markers one half-mile apart. Further, he offered £100,000 for the first person to fly across the channel. In modern US dollars, that’s the equivalent of $1.3 million and $2.5 million. It was the X-Prize of its day.
A decade went by. Dozens of teams tried and failed to build an airplane that could meet the requirements. It looked impossible. Another decade threatened to go by before our hero, MacCready, decided to get involved. He looked at the problem, how the existing solutions failed, and how people iterated their airplanes. He came to the startling realization that people were solving the wrong problem. “The problem is,” he said, “that we don’t understand the problem.”
The realization that the American health care system must simultaneously decrease per-capita cost and increase quality has created the opportunity for the United States to learn from low and middle-income countries. “Reverse innovation” describes the process whereby an inexpensive innovation is used first in countries with limited infrastructure and resources and then spreads to industrialized nations like the United States.
The traditional model of innovation has involved the creation of high end products by companies in industrialized nations and the spread of these products to the developing world by adapting them to function in low and middle-income countries. Reverse innovation reverses the direction of spread with the United States borrowing new ideas and products designed for less wealthy countries in order to deliver health care more efficiently. (1)
Resource challenged low and middle-income countries are different from the United States in at least six ways that can serve as catalysts for such reverse innovation: 1) affordability, 2) leapfrog technologies, 3) service ecosystems, 4) robust systems, 5) new applications, and 6) the absence of intermediaries. (2,3)
These nations can’t afford expensive goods so they have to find inexpensive materials or manufacturing options. They also lack 20th century infrastructure and so they have leapfrogged to newer technologies such as mobile phones or solar energy instead of landlines and petroleum based energy sources. Service ecosystems develop in developing countries because entrepreneurs have to rely on others for help by creating new partnerships like video-game cafés where gamers test new products. Emerging markets require products that work in rugged conditions, and customers in poor countries have few product choices, providing market openings for add-ons that update and extend the lives of existing merchandise. (2) Intermediaries such as venture capitalists, universities, and regulators are also often underdeveloped in poorer countries. (3)Continue reading…
Recently ZocDoc had a huge funding round demonstrating the success that they are having. There’s a number of lessons learned from ZocDoc’s experience. Unfortunately, many haven’t demonstrated Zocdoc’s wisdom leading to a large number of healthtech failures. A recent study highlights this phenomena. After interviewing 110 digital health entrepreneurs, RockHealth recently released its study Rock Report: State of Digital Health demonstrating the disconnect between the startups getting funding and what many startups are pursuing. This disconnect is the last and most important reason healthtech companies have failed that are detailed below. The following are the top reasons why healthtech companies have failed or had to do major pivots in order to survive:
Lack of Specific Focus or Adoption point
It’s well documented that a lack of focus kills startups whether they are in healthcare or not but it is particularly prevalent in healthcare. The diversity of opportunities in healthcare is so great that it’s tempting to try to solve it all. These startups are ignoring the old saying about how to eat an elephant — one bite at a time. Too many startups are trying to swallow the elephant whole.
Expected consumers to pay
With the exception of weight loss programs, there aren’t many examples of consumers paying directly for health services. Over time, this is likely to change as more of the burden of healthcare costs gets shifted to consumers as was highlighted in a Healthcare Disruption series (see links below). However, I’d be very cautious about any business expecting to have consumers pay in the near-term.
mHealth – otherwise known as mobile healthcare – sounds like just what the doctor ordered to help make healthcare delivery cheaper and more effective. And since the Internet today essentially resides in everybody’s pocket, it would seem as though it’s ready to be implemented. But we have what amounts to a “last-three-feet” problem. So I’m not sure mHealth is ready for primetime, mostly because I don’t think our conventional healthcare system is ready or capable of embracing it.
The goal is to have patients wirelessly send appropriate clinical information to their healthcare providers in a timely manner. This would save time-consuming trips to the doctor on their part and, for doctors, ultimately make it easier to retrieve key patient clinical data. Such a system could detect events just before they happen and allow early critical intervention. The problem is that at this point this is just a goal, not reality.
I have looked at a half dozen startups in this space but haven’t made a commitment to fund any of them. In many cases, their technology looks promising, but it isn’t clear how the company would actually generate consistent revenue. Would the healthcare system reimburse mHealth? Would the doctor know how to interpret the flood of real-time data? Would our system drown under a deluge of alerts, many of which resolve naturally? There is a wealth of questions around these issues.Continue reading…
I’m going to tell you something that Barack Obama doesn’t understand.
And because he doesn’t understand it, our country is wasting hundreds of millions of dollars at a time when we cannot afford to waste hundreds of millions of dollars.
Time and again President Obama has told us how he intends to solve our health care problems: spend money on pilot programs and other experiments; find out what works and then go copy it. He’s also repeatedly said the same thing about education. The only difference: in education we’ve already been following this approach with no success for 25 years.
Still, if the president were right about health and education, why wouldn’t the same idea apply to every other field? Why couldn’t we study the best way to make a computer, or invest in the stock market and do any number of other things — and then copy it?
I want to propose a principle that covers all of this: entrepreneurship cannot be replicated. Put differently, there is no such thing as a cookbook entrepreneur.