Yes, it’s true. Sunday’s Venture+ Forum, one of the day-long events that takes place before the official start of the mHealth Summit 2013, was a lot like living Gartner’s Hype Cycle in one day. Before I tell you why, let me first offer my sincere apologies to Gartner Inc. (I’ll reference the Gartner methodology in underlined italics). Absolutely no offense is meant, but this borrowed framework could be the assist I need at 1 a.m. to offer up my POV.
Keynote Speaker: Jack Young, Director of Qualcomm Ventures
The day began with Jack Young, Director of Qualcomm Ventures and head of the Qualcomm Life Fund. He talked about trends that we should all know by now— the rising costs of healthcare (at $8K per human per capita, health is the most expensive subscription in our home); the aging population (a company in Japan reported that it had sold more adult diapers than baby diapers this past year). Qualcomm sees the Technology Trigger in the emergence of wearables or “mini working computers” and with big data in health such as claims data, EMR data, genomic data, consumer and social data. The wearables industry is emerging, having come into our lives connected to our smartphones. In this way, if you will, our social-ness is changing too. When you wear a wearable (watch, glasses, shoe, shirt, pin—whatever item(s) we choose), we are more likely to accept that “I’m on the journey” to health, wellness and wellbeing. We’re involving our friends, families and co-workers. The data that is, or will be coming from our use of wearables and other sources, will give us meaningful insights that can change behavior and health outcomes. It sounds a bit like Lucy in the Sky with Diamonds, yet who doesn’t love an investor with California Dreamin’ on his mind. I know I do.
But I already could feel the climb toward the Peak of Inflated Expectations. It really didn’t seem too far away or too high up. There are a number of road posts as Jack pointed out:
1) The number of companies that have invested in wearables are taking in big bucks—some over $50m to date (AirStrip or FitBit for example); some have raised over $100m (23andme, Practice Fusion); and then there are companies that investors have pumped over $150m into (ZocDoc, Castlight, PatientSafe, Proteus).
2) The fact that many investors are first timer investors, jumping in late, and even large investors in health for the first time.
3) The caution signal with the curvy line that tells us the cycle for exiting is 7 to 10 years. Jack’s starting the mathematical climb and just as I am beginning to feel the first signs of Climber’s Regret, he asks: “How many of these companies are going to be worth one billion dollars in five years?”
To be frank here, it’s a bit of a downer as Jack talks about trust issues in that tug-and-tug relationship between investors and investees. I am feeling like James Spader’s character Red in The BlackList when he says “I can only lead you to the truth. I can’t make you believe it”.
Perspectives from the Trenches of Inventing, Investing, and Innovating
Amita Shukla softened our entrepreneurial and investor descent. And although we’ve all self-identified as change agents, my gut knows we’re headed to the Trough of Disillusionment. The velocity of downhill is contagious. Amita, a former Principal at New Enterprise Associates (NEA) who frequently advises startups, takes us a bit deeper into ourselves. As we head toward the Trough, she reminds us that there is an art to the science of transformation. “All innovation technology is meaningless if we cannot ultimately impact human behavior.” She reminds us that in order to make change, we are taking on systems that tend to resist change and that these systems include hospitals and physicians, for example. To be the change, we must value failure more than success. It’s nearly impossible for us to hit a bullseye the first time around—“being a VC makes you more of an expert at failure than at success.” Ms. Shukla prompts us to ask simple questions: Why do we get sick? What happens to us before we get to the doctor’s office? Are we biased in our attempts to interpret the data we collect? Are we set so much on success that we may turn away from seeing what’s ahead?
The 11 company executives that participate in the judging section attempt to address many of the systemic issues that appear to some to block change. There are no wearables, no new gadgets or gizmos that light up the room with wonder. These companies are taking on the tedious yet recurring issues that permeate the industry—remote monitoring of chronic conditions; attempts at the translation of data inputs such as EMR and genomic devices to engage patients by providers; tracking patients by patients and their providers; ways to triage with clinical protocol software; the use of video to stream patient education; an EMR for dieticians; tools that nudge patients for adherence by pillboxes that light up or buzz and others that remind by mobile.
The winner of the group is M3 Information, a Rockville, Maryland based startup seeking $1.2 million. The group created a web-based screening instrument that is used to detect mental symptoms, which is a validated 27-item patient-rated checklist, and it allows clinicians to simultaneously screen for depression, anxiety, bipolar disorder and PTSD. The business model works for the judges—the screener is already reimbursed by most payers. Mental health, always the stepchild of healthcare, has become a top concern in the age of reform.
My pick, however, was Tiatros led by Kimberlie Cerrone. Already selling to 50-100 top clinical research centers in the US, Tiatros is a social network-styled mobile solution currently in place at UCSF, UCLA, UCD, UCSD and UCI Medical Centers among others currently addressing coordination in clinical research and clinical trials, but clearly has applications for care coordination across complex system components. I also like the fact that Kim, a woman CEO and founder, has been a successful co-founder or executive in eight startups, two of which she took from pre-corporate formation to IPO. IMHO, Tiatros is a company to watch.
There was also an uplifting moment when Robert Herzog, CEO of eCaring announced that he has received an additional $3+ million in funding just last week. Herzog has built an icon-based platform that helps health aides, family members or patients regardless of literacy levels to input and access data in ways that generate real-time clinical and behavioral information from the home. For the most part, however, (as someone at my table grumbled), this group appeared to be a bit “ho-hum.’ In most of these cases, it isn’t that they aren’t good ideas, it is simply that addressing the harsh reality of enterprise and systemic problems just isn’t sexy, and the devil will be in the details and execution. You cannot get that in a 7-minute snapshot.
The New Golden Age of Innovation and Investment – Opportunities and Challenges of an Evolving Healthcare Landscape
Next up is Pat Salber, MD, founder and CEO of Health Tech Hatch and cofounder of Health Innovation Media (along with cofounder and my friend Gregg Masters). Health Tech Hatch is a resource for healthcare entrepreneurs offering crowdfunding support and concept testing and feedback. Pat is also founder of the healthcare blog, The Doctor Weighs In. We are heading toward the Slope of Enlightenment as Pat crafts masterful interviews with Lisa Suennen, Co-founder and managing member of the Psilos Group, and Elliot Menschik, Managing Director of DreamIt Health. Lisa also co-authored, Tech Tonics: Can Passionate Entrepreneurs Health Healthcare with Technology?” with Forbes contributor David Shaywitz. DreamIt Health works with pre-seed and seed-stage tech startups through accelerator programs run in various cities. In health, DreamIt has set up programs with the University of Pennsylvania, Independence BC in Philadelphia,and now Johns Hopkins University. The two investment groups are an interesting juxtaposition on stage.
If DreamIt’s $50,000 for startups is ramen, then Lisa says Psilos’ $10-$20m investment must be lobster. DreamIt is too young for exits in health; Psilos’ best investment to date was Extend Health, one of the first private insurance exchanges operated for retirees of Ford and Chrysler. Psilos held this visionary investment for five years and the company was acquired for $450m or 11x the money. DreamIt, according to Elliot, is delighted by its investment in Biomeme. Biomeme’s platform transforms a smartphone into a mobile lab for advanced DNA diagnostics and real-time disease surveillance.
The goal is to offer medical professionals, regardless of their location, the ability to do advanced diagnostics and perform disease surveillance. I feel a tingling in my feet as I realize I am feeling enlightened once again.
Business Model Innovation – The Competitive Advantage in Healthcare
With Chris Wasden, Manging Director and Global Healthcare Innovation Leader at PwC, we’re onto the Plateau of Productivity. He takes us through some business model discussions, but emphasizes that any business model is looking to solve for changing behavior. We’re in a time of moving from revenue from the “thing” or device to incorporating changes in behaviors to change outcomes. For the first time, we have a new “digital hook.” Just as Amazon and Google have taught us to appreciate e-commerce and personalization by giving us something that we want, we’ve learned as consumers to give them back things that they need in order to make their business model. In the new business of health, mobile and sensors are the new digital hooks.
We need to incorporate what we get into our business models so that when companies address the absolute requirement of changing behaviors, we have the elements that support our value propositions. He’s created a light tool for show and tell on attacking obesity by crafting a simulation of a business plan. We’re asked to be a CEO of a pharma company and we are looking to make money in a pay-for-performance world by owning the disease business model.
The simulator offers up a dozen of options; we only get to choose five we think will give us the most revenues, the most weight loss and the longest adherence—changing behaviors make the business model. Pharma is getting this, and he shows us that at least one pharma company has gone to just this model. Give the drug away; get paid by outcomes based on sensors, devices and data integration. The drug is free, but the company gets paid when outcomes are better than benchmarks.
What companies value has much to do with productivity. Eric Koester, an entrepreneur and co-founder and COO of Data Collateral (DCI) had a lot to teach us about innovation. Eric was the cofounder of Zaarly, which was named one of the world’s Fifty Most Innovative Companies by Fast Company in 2012. Some companies are unwilling to let go and create a “treadmill of innovation.” Sometimes companies put too much value on IP, and Eric believes that there are “more ways to protect your company that just IP.” As a consultant, I work with companies in transformation.These are companies that are trying hard to embrace innovation in a way that clears the path of old thinking yet does not maim their core business, products or revenue base. But it’s really much harder to do—ask Michael Dell about productivity as he prepares to once again take on innovation and face his real customers (hint: customers, not shareholders).
As I turn off the lights and turn down the covers in a snow and ice-covered Washington DC to prepare for tomorrow, I realize that it’s all paid off today. I get it. I’ve been hyped, so to speak.