Carl Byers, Partner at our US-based sister fund F-Prime, was on the founding team of athenahealth, Inc. (Nasdaq: ATHN). On a recent trip to Bangalore he shared his advice for health tech startups in India.
athenahealth: lessons learnt
Healthcare is inherently local; from consumer needs, to provider organisations, to reimbursement systems. Replicating what has worked well in one country and applying it to another is counterproductive. Instead, we learn from the journey then adapt it to our own geography. Lessons from the athenahealth story include:
- New platforms like the cloud can enable new value propositions
- The benefit of true customer discovery within the provider setting
- Taking on a vital set of existing functions promotes ‘stickiness’
- Be open to a key pivot when a larger, better model is apparent
- Public markets can empower, but they also take control
Strategy is a choice, so is culture
Which makes culture strategic too. The two are intrinsic to the success of any organisation. At athenahealth while strategy was discussed and debated, culture was thought of with as much vigor.
The principles that underpinned their culture:
- Everyone in the company is both a teacher and learner
- Everyone plays to win
- Learning is a constant
How to stay focused
In the early days, founders tend to be overwhelmed with too many areas that need their attention. How do you stay focused and drown out the noise around you?
- Go after the largest opportunity on earth with a plan that is ambitious
- Focus on big problems; deliver financial value; have a network effect
- Don’t overcommit to your first idea
- Operate within a real market
- Iterate until some people love what you do deeply
How to win
Winning also requires focus:
- Delineate the larger vision from an achievable mission
- Have a strategy - a real one that drives resources and actions
- Measure what matters and don’t let that be only financial metrics
- You don’t own people, but you do own culture
- Apply a framework to important matters like R&D spend
Are IPOs the ideal path for entrepreneurs?
Nearly a decade ago, the aim of any entrepreneur in the US was to go public. Today things are a little different; there are private investors involved and the hope is somewhere along the way the company is acquired. In China and Japan, things are different; it’s all about the IPO. That might have been the sentiment in India too probably five years ago.
In the US, the total number of listed companies fell from 8,000 to 4,100 between 1996 to 2012. There’s definitely the feeling that it is far simpler to acquire your way to greater scale.
The future we strive for
Where is digital health headed? Will Amazon, Google and Apple all jump on the healthcare bandwagon eager to transform it? Will Amazon build a pharmacy supply chain business? The main issue with these assumptions is that these are all big global businesses and like we said at the start, healthcare is local. So, what then?
For every child born in any part of the world, this should be the ‘new’ world that they’re born into. A world where:
- Their DNA is fully sequenced at birth
- They have one electronic record that all providers read from and write to
- Privacy of all medical data is assured
- The child is fully vaccinated and immunised
- Medical coverage in case of disease or injury is assured
- Health is continuously monitored throughout its life
Venture is all about finding good ideas that look like bad ideas
This is how Chris Dixon, Carl’s dorm mate at college, described venture capital. If it is a good idea that looks like a good idea, then everybody will chase it, adopt it and all the corporate giants will scramble for it. A good idea that looks like a bad idea means you have the opportunity to innovate and prove everyone wrong.
It all boils down to a secret. At athenahealth, the secret was knowing how the workflow functions, how billing works etc. and because the team identified their secret they were able to innovate.
Everyone thinks it is a bad idea, until it’s not. Another ridiculous idea - letting a stranger in to your space and allowing them to sleep on your mattress. Today Airbnb has a market cap greater than all of the largest hotels in the world.
We love spending time with founders and over the coming months we’ll be looking at other #Scaleup topics to discuss and write about.