The solution to the nation’s long-term deficit problem is generally portrayed as a choice among sharp budget cuts, major tax increases or a combination of the two. Given the magnitude of the problem, some level of sacrifice is probably unavoidable. But there is a third, overlooked approach to major budget savings — innovation — that the new congressional supercommittee should also include as a key component of its deficit-reduction strategy.
Innovation in this case is the process of trying a range of promising approaches and using rigorous evaluation methods to determine which of them really work. In many areas of the economy — such as information technology, agriculture and manufacturing — innovation has often identified ways to both reduce cost and improve performance. This has led to amazing progress over time, including exponential gains in computing power over the past half-century at a steadily decreasing price. So a logical question is: Can innovation in policy produce more effective government at lower cost?
The answer is yes. There are proven examples, from U.S. welfare policy and other areas, where innovative reforms produced major budget savings while simultaneously improving people’s lives. This suggests that part of the answer to our deficit problem lies in American ingenuity and not just sacrifice.
Blueprint Health is a specialist health IT incubator that just opened its doors this week and selected its first group of startups who get $20K each and a chance to hang in a nice art gallery in Soho that’s opening officially Thursday (FD Health 2.0′s NY city team will be moving in too). You can read more at Techcrunch and see the HUGE list of mentors here (I was thinking of throwing my hat in the ring until they told me it involved work!). But I wanted to ask Brad Weinberg & Mat Farkash, the founders, what was so special about Blueprint, so Mat told me:
Matthew H: Describe the Blueprint program
Mat Farkash: Blueprint Health is a New York based health-focused accelerator that is a Charter member of the TechStars Network. Blueprint Health kicked off its three-monthWinter program on January 9 in its 12,000 square foot office in SoHo and will also host a summer program in 2012. The program is a heavily mentorship focused, providing teams with access to over 120 mentors, all of whom have experience in the healthcare industry, including many physicians and health providers.
Health startups are emerging in high numbers this year and it’s no surprise. The health tech space is booming with new advances in HTML5, mobile health, and social media. But with the economic downturn, it’s hard to go out on your own without funding or guidance. But there’s help. Over the past year, four startup incubators have surfaced offering a mentoring program specific to health technology entrepreneurs. But, which one should you apply to? Here’s a breakdown of each accelerator and their offerings:
I am contemplating writing a book on physicians seeking venture capital to escape the fetters of practice and to launch innovative ideas.
If I decide to go ahead, I will author the book my colleague, Dr. Luis Pareras. Dr. Pereras is a venture capitalist. He lives in Barcelona. In Europe, aging populations, plummeting birth rates, and soaring costs make it hard to sustain overly generous social welfare states. I live in the U.S, where, to a lesser degree, a similar situation is emerging.
Here Medicare is approaching bankruptcy. Medicare is the single biggest contributor to our growing budget deficit. In Europe, centralized bureaucracies often smother innovation. This may soon be the case in the U.S. Europe and the U.S. are inextricably interlocked sectors of the global economy – economically. clinically, but not always culturally.
Nevertheless, both physicians in Europe and the U.S. are unhappy because government is cutting their pay and ramping up regulations to make national ends meet. Some physicians in Europe and the U.S are turning to venture capitalists to get the money required to launch start-up health –related enterprises. Others rely on their own finances or angel investors.
A few months ago, I heard a young design entrepreneur named Aza Raskin talk about his idea for a consumer health company, MassiveHealth, built around the concept of providing rapid feedback. For example, if you had a skin dye that faded a certain amount each time you took a dose of your antibiotic, you would be more likely to complete the full course.
Skip ahead not very far. Recently, MassiveHealth launched its first, free app (dubbed an experiment), called the Eatery. The idea is that you take a picture of your meal and rate its healthiness, which is then shared with other users. You benefit, as I understand it, by thinking more about your food and by getting input on your food from other users. What the company itself gets is not yet clear. They’ve shared some pretty maps of San Francisco and New York City showing where people are eating more vs. less healthy foods, and they’ve drawn some fairly general conclusions about how the supposed healthiness of our food changes during the day (good at breakfast, bad during the day, partial recovery at dinner).
At least as important, I’d imagine, they have an engaged group of users who seem (at least at this early stage) to be interested in interacting with the platform, and thus contributing to the development of the emerging data set; after only a week, more than one million food ratings were reportedly received.
I cannot resist writing one more time about the entire market access discussion currently ongoing everywhere, as I believe many of those numerous articles and reports are missing the point.
It is amusing, at least to me, to see the continued flood of articles, consultant presentations, blogs, congress announcements, workshops, summits, reorganizations, speeches, etc. all over the place, basically suggesting how the industry just needs to throw a few more people with fancy titles here and there, coupled with slight organizational changes, onto the problem and involve stakeholders and—guess what?!—actually talk to patients and perhaps even payers and all of a sudden, like Alice in Wonderland, everything will be good, after all.
The uncomfortable truth is, it won’t be. All this “noise” is only good for one thing, paying the bills of the consultants, which is fine, too, as I have been one myself so I can understand. But it will not address the problem the research-based pharmaceutical industry and its employees are facing. Without a substantial increase in R&D productivity, the pharmaceutical industry’s survival (let alone its continued growth prospects), at least in its current form, is in great jeopardy.
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.
Listen to them on Itunes or Spotify
Want to Partner with THCB?
View our Advertisement & Sponsorship Prospectus here