I’m sick. I have some nasty bronchitis thing and it sucks. There is nothing worse than a sick healthcare industry person. We are the worst patients ever because we know all the things that can go wrong and we know all the ways we can make ourselves worse. And that makes us even crankier than just being sick makes us anyway. If I were anyone I know, I’d maintain at least a 10 foot perimeter around me at all times. 
When you’re sick and a healthcare person, it is even easier to see the absurdity of some of the new, new things in healthcare. As I sit here, surrounded by tissues and tea and my combination human/pet support group, I cannot imagine how so many of today’s hotter than hot technologies would make me feel better. If AI had predicted that I would get this crappy lung disaster from my vacation at the beach, I still would have gone. If blockchain could tell you the provenance of my DayQuil supplies, would I care? Nope, not today.
I recently got shown this ad for a medication compliance system. It is precisely what I’m talking about. Here we have AI, cryptocurrency and IOT all rolled into one to help people remember to take their medicines. View the VIDEO and tell me if this is how you see the healthcare system getting better – I’d love to hear your point of view.
I don’t know the Elysiot people and I don’t mean to pick on them more than anyone else, but seriously folks, if we are trying to “meet the patient where they are,” where in the heck do they think I am? NASA Mission Control? I am pretty sure that Mission Control does not feature a gargantuan pile of used Kleenex, two cats, a Chihuahua, and a mug of tea that looks like this. I know
that my house doesn’t feature a silver metallic robot (at least yet).
I drugged myself up enough this morning to tape some new episodes of my and David Shaywitz’s Tech Tonics podcast (didn’t even need blockchain to do it!). One of the people we interviewed today was Owen Tripp, CEO of Grand Rounds (show will be released on July 23) and we talked about this whole area of technology and its place in healthcare. As someone who has been very thoughtful about how to combine technology and humanity, I appreciated hearing Owen say that while he fully expects AI and blockchain and all the other new whiz bang stuff to play a meaningful role in healthcare over time, we can’t get too enamored of this stuff too early.
Healthcare takes a long time to absorb new technologies. If you have heard of Moore’s Law, which essentially says that technology capacity will double every two years, you know that it doesn’t exactly apply as is in the healthcare context. Healthcare operates on a path closer to Morgue’s Law, which, according to me, says that companies that try to completely replace the human touch with technology are destined for the morgue and definitely not on the fast track for adoption. Or perhaps it’s Moor’s Law, where Moor is defined as a tract of open, peaty wasteland… where early attempts to over-technologize things go to die.
Both Owen and Brad Hirsch, CEO of SignalPath and another Tech Tonics interviewee today, talked about how there is virtue in being later to market as opposed to a first mover. Owen discussed this in the context of Reputation.com, a company he co-founded which he reported as being a bit ahead of its time. As a result, companies have to spend time evangelizing the concept rather than selling the value of the product itself. By the time the adopters are ready, lots of water, time and capital have gone under the bridge. On the other hand, if your company is more of a fast follower or even later, it’s possible to integrate the learnings of the pioneers with the arrows in their backs and bring something better to customers that is somewhat arrow-free.
This is an interesting point of view in great contrast to where the venture capital world generally likes to traffic. VCs tend to favor those first time, out-in-front wild and crazy ideas that could vastly change market dynamics. This seems to work really well in the consumer and tech worlds. But in the healthcare world, it is often the later entrants that win. We are watching this play out right now with the moves of Amazon and Apple, for instance, who are coming at the market with second or third generations of new things, not fundamental first time innovations. And they seem to be doing pretty well at it. I see the same thing with startups. It’s not unusual to see later versions of companies, who have “perfected” the first mover’s ideas and lain in wait until the healthcare temperature is right, to be the real winner.
Grand Rounds itself is such an example. It’s not the first company to tackle the second opinion concept, but it has certainly gotten farther faster than its predecessors. Similarly, SignalPath has done the same in creation of technology solutions for clinics to better perform clinical trials. They are not the first to think of this, but they have made it when many early companies did not because pharma just wasn’t ready when the first crop of these companies started hitting the market 15+ years ago (e.g., when health systems had yet to agree that it was safe to use cloud computing).
It’s a very interesting thing to think about – whether it’s best to be early or late – considering that it’s almost impossible to time entrepreneurship just right, Goldilocks style. Healthcare technology and technology-enabled services companies are raising gobs of money these days and much of it is being used to fund the losses of those early days of non-adoption/evangelization. About half of all venture funding into digital health is in the seed/Series A stage right now, so early on. Is it better to be funding those companies that are the second-coming of whatever almost worked or those that have entirely new technologies, ideas and business models? A tough question and great investors could confidently answer both ways. I’d welcome your input. I’ll try not to cough on you.
Note: if you are dying for an example of insane, buzzword-heavy, over-the-top marketing of tech products outside of healthcare, here’s a fun one.
I don’t think order of market entry matters nearly as much as execution and calibrating burn to rate of market adoption.
Tom, not sure I agree. They may be intrinsically intertwined in some cases (e.g., – early market entry = high burn rate due to cost of time to adopt) L
Have you heard of Second Mover Advantage? Google was late to the search engine market and there were 20 other online book sellers when Amazon launched.
Hi Stephanie, clearly that works better in many aspects of healthcare entrepreneurship. Amazon is a master at this strategy. L
Great post despite the nasty bronchitis.
I think there are a few challenges….
a) not understanding needs well enough (what the patient/provider actually needs)
b) many stakeholders (patients, providers, payors, etc) who need to be convinced (anyone of which can stop the show)
c) healthcare is very fragmented so moving first do not automatically lead to scaling (i.e. just because it worked in a CA hospital does not mean it works in NY)
So take what is already complex (introducing a new offering) X 10. So going late means you can learn from the mistakes without burning cash.
Martin, exactly. Lisa
Love Martin’s comment and agree with the 3 of so many more challenges
Ironically these challenges are dealt with by AI
Not the AI that Lisa raised. A new business model of delivery with (A)ligned (I)ncentives, is what I mean by AI. The time is now and yes incentives have been aligned. Another irony, as difficult as it is to push against mega-legacy, it is easier to succeed in Quad aim than the Triple aim
“The early bird gets the worm but the second mouse gets the cheese.”
Built into the humorous framing are a few assumptions. On the bird side, there is a scarcity assumption that there is essentially one worm. It can be true in terms of opportunity to dominate the market but itself presupposes that you execute well (Tom R’s point).
I like the mouse metaphor because it leaves you a picture of the first mouse, dead in a mouse trap. A strong argument for the second mover position. Again, the assumption is that there is only one trap and it is now sprung.
The advice I’ve heard in the VC world that makes the most sense and most applicable is that you have to “be smart, relentlessly optimistic and do so long enough to get lucky.”
Hi Joe, yes I think the luck of timing is very real. Lisa
Hi Lisa,
Feel better!
Having pulled numerous arrows out of my back (built a company around AWS in 2006), first mover is meaningless. Instead the question that everyone needs to answer is “Why now?”
I am a startup mentor at BoomStartup with 20+ companies a year. Testing your hypothesis against the business model canvas prevents a lot of pain. And saves a lot of investment money.
This saved me from investing a lot of effort in a post acute arthroplasty home care startup. We could not validate a key hypothesis. With the new CMS rules, perhaps it will make sense in a couple of years.
I think you’ve mentioned before that digital health (or equivalent term) is a service business. Your run of the mill blockchain, AI based, HIPAA compliant app might not be of value, but being able to connect with a medical professional who could triage you to the most appropriate level of care might be useful and if tech can help make that process convenient and frictionless for both you and your doctor, that’s value created there. We (entrepreneurs) need to stop thinking of technologies and think of what services we provide that add value to someone else’s life. We’re funding, I guess it’s about what evidence can you show that you are going to execute well – is it that you are the former head of CMS and HHS and have a VA head on your advisory board? Or customer proof points both on the clinical and economic fronts? How much data? What populations? I also think it’s important to raise as much as you can, because frankly, most people are not in a hurry to implement new things but be disciplined about burn. And if you are inexperienced and lack data and have never sold to hospitals before, god bless you.
Timing is everything, but regrettably not something we control. Ideas come when they come, typically based on experiences and existing solutions. In my experience, being the early first mover is bad, really bad, in an industry that takes decades to adopt. But as an entrepreneur waiting on the industry to catch up is unrealistic- we convince ourselves it’s the right time.
In terms of tech, it’s not AI or Blockchain, or Telehealth or…I believe it’s tools enabling solutions to change the ways we care for one another, facilitating relationship that matters
I agree they are intrinsically intertwined mainly because many tech entrepreneurs and investors who have migrated to HC are following the “make a big splash and win the land grab before the competition gets here ” game plan rather than keeping a low burn rate, and focusing on gathering evidence of outcomes improvement and ROI.
I think this is also tied to trying to build a compelling exit story rather than a sustainable company (e.g. Castlight, Practice Fusion, etc…..)
Yes the Health Care system is bedevilled with legacy thinking and vested interests. Whilst my technology is equally applicable to care facilities I have chosen to cater for the live better longer at home model than waste my time trying to get facilities to understand the benefits of a smart nurse call or fall detection, connectivity post discharge or the many other features I have developed. My AI solution to falls and the smart home solves a need for us senior citizens.
https://www.linkedin.com/pulse/gabriel-ai-detects-falls-summons-help-terry-crews/
I totally disagree. it is totally therapeutic areas and disease-dependent!!
Look at what Gilead was able to do as the first mover followed by subsequent innovative follow ups in the HCV market!
Hi John, I agree that in drug therapy it is very different. But in health tech it is what it is. Lisa
Great post. Great comments. Adding on…
1. If you win intrinsically with powerful network effects, they are usually winner take all or duopoly markets. You don’t have to be first, but the first to succeed… game over. (AT&T, Facebook, Surescripts).
2. The Stephanie Tilenius and other comments are very good at pointing out “second mover advantage”, which is very real, but it depends. Plenty of recent counter points- Epic, CoverMyMeds, PillPack, Flatiron.
3. Truly special tech /IP can make the difference, regardless of order.
Thanks for the comments, Scott, and I agree. There can be special sauce (e.g., IP) that can make the difference, though it’s pretty rare in health tech/software generally. L
In the world of pharmaceuticals and biotech, there’s an adage in product development that you either be first in class or best in class. Over the years, the advantage of being first in class or being first mover mainly makes sense when you have a clear time advantage you can leverage that allows you to pull the arrows out of your back and put iodine on the wounds to heal them. The examples of later entrants coming in and succeeding relative to a first entrant are numerous and include products such as Lipitor, Humira, Cialis… I could go on, but, hopefully, the point is not about order of entry but about the degree of differentiation a newer entrant brings to an emerging market.
Harris, no doubt you are right and there are exceptions to both sides of the rule. It’s not just about differentiation but customer-centeredness in my humble opinion – solve a real problem or need and do it well and hit the market at the right time, whatever that is. L
Thanks Lisa for the great post and the Morgue’s Law metaphor!
The post made me think of Steve Case’s book The Third Wave–which I didn’t love, but makes a great point that this “3rd wave” of technology adoption requires collaboration with key partners and policy makers. To me, that is where we are now. I see many (most?) barriers being around policy and the challenges working with complex bureaucracies (e.g. like your great podcast with Molly Coye and her work with Medicaid and AVIA demonstrates).
Take telemedicine for example. US companies are limited by where, how and what services they can offer based on state boards of medicine. My husband, who recently got over a nasty cold like yours and needed a steroid burst to clear the final remnants, used a Canadian company called Maple Health (what else? We live in Montreal currently). It was the best $30 he spent in recent memory–got his prescription called into the pharmacy and the whole thing took 10 min from the comfort of his home office.
IMHO, a lot of the hype around the coming “digital/AI/block chain revolution” in medicine comes from often well intentioned but gravely naive entrepreneurs (and investors?) who don’t understand the complexity. While the industry needs new ideas, the problems will have to be solved in collaboration–institutions as entrenched and as calcified as the US healthcare system are not so easy to disrupt.
PS, that “trailer” for Elysiot was fucking ridiculous!
The Elysiot thing was all that and a bag of chips!