This is the part of the story from which every entrepreneur can learn—how startup companies handle these customer objections can either make or break a startup. “Potential customers started to say things like, ‘You mean you can take the data from all these integrations and send it to our data base?’…or ‘You mean, we can take that data and use it to display in my patient portal?’” When those questions arose, Beckland and Schiller said it was difficult to get those new customers back on point during their usual sales calls. So, they listened and began to understand that corporate wellness programs at the larger companies believed that they already understood how to do employee engagement—but they didn’t get the data part.
“I remember this so distinctly,” said Beckland. “We were sitting in a meeting with Safeway Health with Paul Ford. Paul was doing this thing where he kept talking about data and we were talking about employee engagement. I finally said, ‘Look Paul, you keep talking about data. What if we got rid of everything else we are doing and give you the API platform with all the integrations and a single API to do that?’ Turns out we had three meetings that day. We were out in Silicon Valley. We had meetings with Safeway Health, one with Paolo Alto Medical Foundation, and we heard the same thing over and over again. Schiller took over the story at this point… “We were driving back from the last meeting that day. We were in the rental car driving back to our hotel and we looked at each other and Ryan said to me, ‘Do you want to say it or should I?’ Basically, we were ready to blow up our entire model. And so I said it, ‘We need to switch.’”
And so Validic came to life. That’s the story, and I will bet there is more to come. It’s no easy decision to blow up your business model. Entrepreneurs, who listen to their guts, and to their customers, may have some tough decisions to make. In this case, Beckland and Schiller were able make the shift. Other entrepreneurs can learn from this story, but larger companies also need to understand that certain environments may call for strategic directional changeups and the ability to turn on a dime. It’s not easy for big companies to do that, and it is just scary when entrepreneurs have to re-design their business.
Validic’s founders also want to help bring health innovations into the health system. To accomplish that task, the company is sponsoring 25 health-focused accelerator programs and working with other health entrepreneurs. Validic also is developing a community of investors. Now that Beckland and Schiller are building their customer base from the 4Ps, they are being asked about what’s next. Hospitals, payers, pharma are looking for the answers. By pairing their partners with investors, Beckland and Schiller believe they can bring customers a more robust definition of their distribution channel. “Our investors and our customers are saying ‘What companies coming out of these accelerator programs have legs?’ We want to help these entrepreneurs by providing the customer-side distribution channel and help them get the capital for them to get legs… and we do that free for entrepreneurs.”
I find Validic interesting because it has a compelling business proposition. It has customers and a revenue model; and I really like the aggregation and integration model the company is now taking to market, in this time of emerging understanding and sadly,overall hype. Although larger companies can certainly be a data pipeline for mobile health (I’m thinking of companies like Verizon, WebMD, and others), clearly just being a data pipeline is not going to be a billion-dollar business and just may be too small and tedious for those companies to take on. Others, such as Surescripts, IMS Health, even Qualcomm and Intel have core businesses to attend, new products and new market entry to focus on. In fact, these companies could make interesting alliances or investors as Validic builds its base.
Other potential companies that could find Validic interesting could be some EHR vendors. The combination of EHR data combined with device and app data becomes an even more convincing business proposition. Validic could save EMRs /EHRs a lot of effort getting there. Moreover, Validic is shoring up its brand and importance in the marketplace by building its innovation initiatives. It’s making friends and building its customer base at the same time. There may be some competition along the way or other barriers it will need to jump. But my prediction is that some large partner will come along, sooner rather than later, and make an offer they can’t refuse.
And when that happens, Beckland and Schiller will have a great payout and an investment hub already in place— ready to take these young entrepreneurs into their next winning endeavor. That’s a thumbs up for me.
Lois Drapin, MPS-H.S.A. is the founder and CEO of New York-based The Drapin Group LLC, a boutique advisory and consulting firm with a relentless passion for digital/mobile health technology.