Digital health tech startup dos & don’ts

At the recent Health 2.0 Toronto: Product Innovation in Digital Healthcare event held at Toronto’s MaRS Centre on September 16, 2014, Palo-Alto based Geoffrey Clapp (CEO of Better and Health Hero, and Advisor at Rock Health) delighted the room full of 100 digital health startup entrepreneurs.

digital health

Clapp drew from his experience with healthcare startup business models and the challenges he has seen startups face as they navigate the rapidly-evolving digital health landscape. He didn’t pull any punches: His advice was direct, relevant and quite often humourous.

After the keynote, Dr. Joshua Landy, CEO of Figure 1 joined Clapp on stage for a Q&A session moderated by Nikolai Bratkovski, CEO of Opencare.

Overall, the session was brimming with helpful advice to improve product launch success. Here is a summary of the dos and don’ts shared by Clapp in his keynote talk, followed by further tips that flowed out of the Q&A with Dr. Landy.

The don’ts

  • Stop using buzzwords. Doctors and stakeholders see through words like “disrupting,” “fixing,” “saving,” or “revolutionary” to describe innovations. Penicillin was revolutionary. What you’ve developed is likely not — but it can still be awesome. And while you’re at it, strike “uber” from your list.
  • Get ahead of the ‘Silicon Valley B.S.’ Nobody’s actually FROM there, the Silicon Valley is a state of mind. Toronto has a vibrant, thriving startup community with its own strengths, so don’t try to be the Silicon Valley, be happy to BE Toronto.
  • Don’t lead your pitch with stats. Don’t say it’s a trillion dollar market or talk about the percentage of GDP. Anyone can do a Google search and “you’re not going to fluff a fluffer!”
  • Don’t use banking analogies and claim that your product is ‘the ATM for healthcare.’ That may have worked 30 years ago, but hey, Apple Pay just launched last week.
  • Stop blaming regulators. Dealing with the FDA was hard in 2000 when there was no Internet. Besides, regulation is supposed to be hard. You are building companies that hold people’s health in their hands.
  • Stop saying that old people and doctors don’t understand technology. And don’t tell doctors you’re going to “blow up their workflow.”
  • Don’t play the patent card. First, worry about building something worth suing over.

The dos

  • Talk to doctors and listen to what they have to say. At a personal appointment, Clapp mentioned he worked in digital health tech and his doctor handed him a copy of the Framingham Heart Study, a famous study about cardiac interventions. Clapp says the study’s milestone findings contain at least 20 amazing startup ideas and probably 50 more between the lines, but moreover, the 20-minute discussion with his doctor about patient education got him thinking about 3 startup ideas.
  • Show your passion. Be the best advocate for your idea. You are doing something awesome and unique, so own it.
  • Know what came before your idea. If you think you are the first to develop a new way to improve medication compliance, for example, you haven’t done your homework. In the healthcare field, lots has already been tried. Your job is to convince investors and stakeholders how your solution is better.
  • Find innovative ways to deal with regulatory hurdles.
  • Understand physician workflow and how hard that is to change. In the US, the average time a doctor spends with a patient is now down to 8 minutes. Solve their problems and make their lives easier.
  • Use stories of user experiences to show how your product adds value. Everyone connects with stories on an emotional level.

Q&A tips

Q:  Can products be successful if they require users to do something difficult vs. easy?

Landy:  Consider all stakeholders: investors, doctors and patients and make sure all economic incentives — whether those are in terms of time, money or accomplishing a goal — are in line with something they already want to accomplish.

Q:  How do you search for product-market fit and how do you know you’ve found it?

Clapp: “Don’t fall for pilot-itis.” Many pilots are useless because they are not with your end users and you can’t access contact information. Lots of entrepreneurs get a pilot study going with the same three places (two in the Silicon Valley in particular he hears about all the time…) and lots don’t turn into anything. Figure out who your end users are, get your product in front of them and build a network of believers. If you haven’t been thrown out of a hospital or an assisted living facility, you are not trying hard enough. Also, invite people you know will hate your product the most, or be the most threatened by it, to tell you why your product is wrong. While it may be hard to have someone “assault your livelihood,” you really need the feedback.

Q:  Once you have developed a product, how do you get paid?

Clapp: Doctors know that things are more complicated now for figuring out payment, especially in the US with the Affordable Care Act (ACA). You need to handle that problem for them. There are tons of bring-your-own-devices now, so your job is to do the finance and security thinking up front and don’t give them easy ways to say no.

Landy: Know your champions. There are so many solutions that people are selling now. Some breaks will be due to luck, others due to the right connections. Canadian hospitals have stereotypical responses, so know what those are in advance to convince stakeholders.

Q:  How are markets evolving in the US vs. trends worldwide in the areas of wellness care and monetizing healthy behaviours?

Clapp: There is a push to give consumers more money, such as flexible spending accounts, but so far, it’s not evident that people are any smarter spending on their own. In one example in Northern California, 40 per cent of one group of  health consumers stopped getting flu shots because they saw the money as rainy-day money. The healthcare consumer is pretty confused right now in the US with the ACA, so even when you give them money and tell them it’s free, they don’t trust you.

On the flipside, there are now tons of employer-based programs trying to get more people involved in wellness programs and that market is heavily dependent on sensors. For example, Walgreens now provides incentives for people walking 10,000 steps per day.

US-based CVS/pharmacy recently decided to get rid of all tobacco products and has rebranded as CVS Health. They’ve figured out that they will make more money by being ethical. Within 10 years in the US, Walgreens and Walmart will be where people get healthcare and hospitals will be closing.

Q:  If you are planning to launch or expand outside the US, where should you go?

Clapp: There’s no one right answer. I sold one company to a buyer in Germany and that went well because the buyer was interested in the product and it had a good market fit. I also had a screwed-up launch in Japan due to cultural differences and poor translation to end users. You need to re-fit the marketing plan for each country.

Q:  What are the top mistakes you’ve seen for products trying to go to market?

Landy: Four things:

  1. Not getting the behavioural economy right
  2. Not getting people to use the product
  3. The cash/value tradeoff is wrong
  4. or workflow is not improved.

Clapp: Teams matter. Entrepreneurs tend to think that as risk-takers, they are so special that they can make bad teams work. One of the most important things to do, even though it’s hard, is to fire and fire quickly. There are three rules I have for hiring:

  1. No A-holes. We tend to hire A-holes — every entrepreneur thinks they can fix them.
  2. Prove you’re smart. Your smarts don’t necessarily have to be healthcare-related, but I want to see how you think.
  3. Care about healthcare, otherwise I know you will take the next job that comes along.

Health 2.0 Toronto was co-founded in January 2014 by Jonathan Graff, CEO of Enthrive Inc. and Nikolai Bratkovski, CEO of Opencare, to build a community of health-focused entrepreneurs.

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