Lee Shapiro is an entrepreneur and accomplished health technology executive. He is currently Managing Partner at 7wireVentures, one of the country’s leading venture capital firms investing in early-stage digital health companies supporting an “Informed Connected Health Consumer” – the epicenter of a consumer-first, tech-enabled convergence of the health and care markets. He has served as CFO at Livongo Health and President of Allscripts. In the second post of our two-part series, Lee discusses understanding the health tech market, charitable giving, and learning from regret.
Q: Many health tech organizations must find a way to coexist in an Epic, Cerner, and Meditech dominated world. What does it take to thrive in a market where you have three or four companies getting so much of the spend?
A: At 7wireVentures we invest in companies that are helping all of us address the challenges we face as consumers of health. When you are dealing with health for yourself or for a loved one, you’re seeking a sense of control and to be better informed and connected to the things that allow you to be healthy. Our approach is all about building informed and connected health consumers. We’ve invested in several companies that are successful without having to connect into that electronic health record ecosystem.
The key attribute of successful companies is to allow consumers to better manage their health in a way that’s really engaging and impactful. That impact translates into better outcomes than the alternative while at the same time providing a strong return on investment to the sponsor ( health plan, self-insured employer, or at-risk medical group).
Early on in the life-cycle of Livongo Health, we considered having doctors prescribe our service to their patients and have the data that we were collecting from our cloud-connected glucometers shared with the provider’s electronic health record. Primary care docs drive a lot of the decision making and spend on diabetes but getting these types of solutions connected into an electronic health record oftentimes puts your company at the bottom of a very long list. That is because the CIO has upgrades and other user-related challenges to address – connecting something that’s just focused on a given practice area may fall to rise to a high enough level of importance.
Livongo found a way to work with self-insured employers and health plans to make an amazing service available to consumers and allow the consumer to provide feedback directly to their provider, if she/he so desired. Livongo analyzed and monitored the data that available in its secure cloud, tracked Members to be sure their blood sugar wasn’t too high or too low which could cause a dangerous health event, and then intervened before the Member strayed too far from their own “normal” health status.. That model is one that we’ve repeated in several other businesses where we can work with people to help complement the doctor’s care plan, but not necessarily require connectivity back into those EHR systems on a regular basis.
Q: That’s a great lesson for growing health tech companies. Getting in that long line of people waiting to get approved by the Epic or Cerner App Store is a good way to kill a company, isn’t it?
A: Right. One other thing to mention is that if you’ve seen one Epic implementation, you’ve seen one Epic implementation. They are not always the same at every institution. The same goes for Cerner, Allscripts, Meditech, and others. Most implementations involve extensive customization and integration into other systems. The electronic health record is only one of many systems such as surgical information systems, lab information systems, pharmacy management systems… and the list goes on. Trying to find all the data that you need in one source of truth is challenging. Many health systems now are building data lakes, working with third parties that sit on top of the electronic health record. They then bring in other data sources as well as, including social and demographic information about the patients across their serviced population. You’re starting to see ways for innovative companies to integrate with a richer data set without having to get in line for Epic or Cerner access.
Q: In new product development, how do you feel about balancing the need for speed to market and really taking the time to understand market need
A: You can’t let perfection be the enemy of the good, and I firmly believe companies must build a minimum viable product and get into the market and get feedback. You must make sure you’re giving the market something with a thoughtful process behind it rather than just throwing things over the wall at them. It should be well-tested and clinically validated (if applicable).
Once you get into the field, focus on a limited set of clients. We see several companies that have more pilots than United Airlines. They’re in that mode with so many prospects that they’re only in the pilot business, and they can’t get off the runway. Instead, it makes better sense to engage with just a few customers; Make sure that you have great communication with those clients; figure out where the universalities are; identify problems; make those fixes, and then scale into the market.
Many times, it comes down to setting expectations. We have a great portfolio company that’s working on extending their product into a market that they haven’t yet served. They’re working with a health system as a development partner to learn about the product together. They want to learn from the health system’s expertise and the patients they serve. They’ve set up gates and milestones based on what they learn and will course correct as they go. The client they’re doing this with understands that they’re getting involved at an early stage. The communication between them is critical.
Q: You have been very active with the Startup Health Moonshots Impact Fund. Can you talk a little bit about that?
A: Steve Krein and Unity Stokes, the two founders, are really amazing people. They’re pushing the market to do more, to do better. And there’s no reason we can’t be taking moonshots to address the problems desperately in need of solving. They have over ten moonshots on their list now and it continues to grow. Part of the reason I personally invested was to support their work with early-stage companies and build relationships for future investment by 7wireVentures. We appreciate being introduced to founders with a passion for solving meaningful challenges in an area that we also care about.
Q: As you are coaching and developing the CEOs at your portfolio companies, how do you suggest that they prioritize charitable activities, both personally and for the company?
A: Giving back into the communities that we serve is critically important and a value that we cultivate in all the founders who we work with. It’s important to establish a culture of giving back early in the company’s growth. It’s a way to let customers, suppliers, and other partners know what you stand for.
At 7wireVentures we have made commitments to many charitable organizations – including the Juvenile Diabetes Research Foundation, the American Diabetes Association, and the American Heart Association. If you are fortunate enough to have some financial success, it is a privilege to be able to give back. The bible teaches “to whom much is given, much will be required.”
Q: Any final bits of advice for health tech CEO’s?
A: Daniel Pink is a great author and has recently released a new book called the “Power of Regret”. Regret is something that becomes a learning experience and something that you can grow from. That is the case whether it’s a regret about not taking action or not making a certain connection.
Certainly, we’ve all had plenty of things that we haven’t done right over the years and which we regret, but we’ve tried to learn from those experiences. For CEOs, it is critical to take stock of where you are – almost float above it all and assess how you’re doing. Seek the things that you can change. It’s important not to wait too long before you consider those changes. You might do something today that you regret this afternoon. Don’t let it sit and fester. Learn from it and take action when it’s fresh in your mind. Not only will you feel better about it, but as you correct those regretted actions, you’ll help your company to become a learning organization that will enable it to move even faster. And that’s how early-stage companies need to act.
Click here for Part One of this two-part series where Lee talks about growth, sales, and the importance of leadership for a health tech company.