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.
Last year I published a piece called “Beyond Innovation and Competition,” questioning the dominance of those values. Economists celebrate innovation and competition as the main source of future growth. Innovation has become the central focus of Internet law and policy. While leading commentators sharply divide on the best way to promote innovation, they routinely elevate its importance. Business writers have celebrated search engines, social networks, and tech startups as model corporations, bringing creative destruction and “disruptive innovation” in their wake. Maximum innovation is the goal, and competition is billed as the best way of achieving it. Players in the vast and dynamic tech marketplace are supposed to constantly strive to innovate in order to attract consumers away from rivals.
In the piece, I explain how both competition and innovation can be as destructive as they are constructive. There are many social values (including privacy, transparency, predictability, and stability), and companies can compete for profits in ways that erode those values. In an era of inequality and hall-of-mirrors stock market valuations, innovations of marginal or negative impact on society at large can be vastly overvalued by a stampede of fickle investors.
The shortcomings of the innovation and competition story also play out in health information technology. Stimulus legislation in 2009 provided many carrots and sticks for doctors to digitize their recordkeeping systems, ranging from bonuses now to reimbursement haircuts later this decade if they fail to implement the technology. Congress structured the incentives to encourage a competitive and innovative marketplace in health information technology. But many doctors are shying away from implementation, in part because they fear that the fast and loose ethics of the market can’t mesh with a medical culture of constant commitment to quality care.Continue reading…
Could it be true? Is venture funding on the mend after it’s collapse in 2008? Some would say that the amount of capital invested is on the rise, and new funding streams are providing an excellent opportunity for startups to start getting funded again. But is this also true for health or healthcare startups? After leaving Google recently, I have been spending time talking to various startups and VC firms that are interested in health and healthcare apps. I am encouraged by what I see.
There seems to be a handful of seed accelerators and government initiatives focused on stimulating innovation in the consumer and provider health tech space. New incubators like Rock Health and Startup Health, an arm of the Startup America Partnership are trying to encourage attention to this vertical. Other cool platforms such as the Quantified Self movement, ONC’s Investing in Innovations (i2) Initiative, and this week’s impending announcement of the SMArt (Substitutable Medical Apps, Reusable Technologies) Challenge Apps are creating some fresh buzz. But what I find even more interesting is that broader tech accelerators like YCombinator, and 500 Startups are also starting to fund some health startups (checkout drchrono.com and Evoz).
While I am making my rounds, I cannot help but make a shameless plug for some of my ex Googler friends at 500 Startups. In case you have not heard of them yet, 500 Startups is a $40 million Super Angel investment fund that was founded by former PayPal executive, Dave McClure and Christine Tsai, former Google Marketing pro who ran Google I/O. They provide early-stage seed funding ($10K to $250K) and have over 140 experienced startup mentors around the world that help with product design and data and customer acquisition. 500 Startups holds a series of events on all kinds of things relating to startup success. In fact, check out the event they are hosting this Saturday, June 25th from 1-6pm called “‘Design a Healthy Startup: Prevent Burn Out.” This event will feature 500 Startup founders and entrepreneurs from HealthTap, EcoFactor, Google, Facebook and Zynga. Demos from cool new startups in the wellness space like Dojo, Habit Labs, and FitSquid, will also be presenting. Read more about the event or sign up to attend this Saturday.
Missy Krasner spent several years helping getting Google Health off the ground, and before that was David Brailer’s right-hand woman at ONC.
Recently, the Wall Street Journal has been writing article after article about how Silicon Valley is suddenly as hot again as in 1995. And anyone driving into San Francisco these days will have views of the city obscured with big “we’re hiring” billboards from the Groupons, Zyngas, Rockyous, and whathaveyous of the world.
In the past healthcare innovation and startups/new value creation has proceeded independent of that tech-scene and it has been much slower, dominated by buying behavior from giant incumbents who thought NIH stood for Not In Healthcare. But as my colleague and Health 2.0 co-founder Matthew Holt likes to put it: change starts at the edges. And we have seen Health 2.0 start small at the edges with the growth of patient communities, followed by other models connecting patients, payers, and providers in new ways (e.g. American Well, athenahealth, Castlight).
On May 18 SDForum is organizing a one-day event highlighting the change that is afoot in mainstream healthcare as a result of the innovation from the edges reaching the shores (and more) of mainstream health and wellness industries.
I am introducing the first keynote speaker (Holly Potter from Kaiser Permanente) and moderating a panel on one of my favorite topics: how data and innovation in analytics can make treatment and wellness decisions better, and hence create value, for all involved. While 80% of presenting companies are young (from only a few months in existence to 5 years from initial funding), there are also some pioneering established companies (Kaiser Permanente, Safeway, PAMF) who will touch upon topics like:
how ONC’s push for ‘data Liberacion’ is one of several forces helping to make health decisions more data-driven
how mobile/unplatforms, cloud-computing, and innovative use of analytics create new opportunities to understand patient behavior and introduce new, smart interventions
how chronic disease treatment is starting a transformation (funky billboards in LAX not withstanding, Lisa)
how new entrepreneurial energy is being backed by more and more funding (Healthtap is one of the companies who recently received funding and who will be on the panel that I moderate, Doximity is another company that fits that bill)
Finally, while some companies in general tech or consumer markets seem to pursue growth without a business model, this event shows how companies in healthcare who get it right (e.g. Limeade), can grow fast, do good, and become financially viable businesses. Maybe one day the WSJ will report on the exciting IPO window of healthcare technology innovation companies for a change. In the meantime, come and see what the future will look like by hearing from those who are building it now.
Marco Smit is President of Health 2.0 Advisors, the market intelligence arm of the Health 2.0 family.
The father of a wireless engineer, who made a good living designing mobile devices, contracted a rare and chronic form of athlete’s foot. Over the course of a few months, the father’s condition worsened and eventually he died. Vowing he would make sure that no-one suffered the way his father had during the last few weeks of his life, the engineer set about developing a wireless athlete’s foot detector.
After obtaining the backing of a venture capitalist, he licensed technology from a university spinout that specialised in bio-sensing and embedded it onto a wireless chipset, which he then packaged into a simple mobile device. The athlete’s foot monitor is now on the market and our wireless engineer is talking to a number of healthcare providers, including the NHS.
There are two important things about this story; first it is complete fiction – and second; anyone who has been involved in the wireless and mobile industry, will have come across real life examples of personal quests masquerading as business plans.