Biotech Tries To Break Bread With Silicon Valley’s Disruptors. It’s Awkward.
Post-Theranos, Can Silicon Valley and Biomed Get Along?
A Caution for Would-be Digital Health Entrepreneurs
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It’s Awkward.","publishDate":1521071132,"format":"standard","headTitle":"Startup Culture | KQED Future of You | KQED Science","labelTerm":{},"content":"\u003cp>The multitrillion-dollar drug industry is trying to disrupt with the kids, and it’s running into a communications gap.\u003c/p>\n\u003cp>At SXSW, the weeklong TED Talk with a music festival in there somewhere, biotech this week has been trying to elbow its way into a conference that has ceded most of its time to tech, with its promises of a currency revolution, Martian colonization, and a hack for anything that moves.[contextly_sidebar id=\"b3t2Gwn1qYHaRu5v5ezcsHmmU5wc8UBh\"]\u003c/p>\n\u003cp>While Uber and Spotify hosted line-out-the-door events that fit the SXSW ethos, the drug industry’s efforts have mostly amounted to awkward attempts to speak the native language, like when Bristol-Myers Squibb, a 130-year-old pharmaceutical giant, tried to entice conference-goers with a session on “hacking childhood cancer.”\u003c/p>\n\u003cp>There was a biotech-focused panel on drugs to stop aging. And a steeped-in-science discussion of how new technologies might be used to boost brain performance. But each was dwarfed, in interest and attendance, by tech.\u003c/p>\n\u003cp>The reasons for the culture collision may be self-evident. No one told Larry Page he needed a placebo-controlled clinical trial to search the internet, and no one forced Mark Zuckerberg to endure a Food and Drug Administration inspection. Why should the would-be disruptors of biology play by biotech’s rules?\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>At the same time, the culture of Silicon Valley — move quickly, break objects — doesn’t always jibe with the realities of biotech. Investment timelines are painfully long and scientific sparks more often than not go dim on closer inspection. California’s moneyed incumbents didn’t get rich off the life sciences.\u003c/p>\n\u003cp>“That phenomenon exists, pointing out that the tech VCs don’t have Ph.D.s,” said Laura Deming, founder of a biotech venture capital firm called Longevity Fund, based in San Francisco.\u003c/p>\n\u003cfigure id=\"attachment_129\" class=\"wp-caption alignleft\" style=\"max-width: 546px\">\u003cimg class=\" wp-image-129\" src=\"https://ww2.kqed.org/futureofyou/wp-content/uploads/sites/13/2014/09/Wojcicki.jpg\" alt=\"\" width=\"546\" height=\"410\" srcset=\"https://ww2.kqed.org/app/uploads/sites/13/2014/09/Wojcicki.jpg 640w, https://ww2.kqed.org/app/uploads/sites/13/2014/09/Wojcicki-400x300.jpg 400w, https://ww2.kqed.org/app/uploads/sites/13/2014/09/Wojcicki-320x240.jpg 320w\" sizes=\"(max-width: 546px) 100vw, 546px\">\u003cfigcaption class=\"wp-caption-text\">23andMe CEO Anne Wojcicki, speaking at the annual SXSW festival in Austin, Texas in March 2014. (Jenny Oh/KQED)\u003c/figcaption>\u003c/figure>\n\u003cp>But Deming believes the phenomenon is more a reflection of time than seriousness. Not long ago, biotech funds were staffed by investors who made money elsewhere and saw promise in the drug business.\u003c/p>\n\u003cp>“I talk to these biotech VCs and it’s like, ‘Look, guys, your lead partner is an investment banker,’” Deming said.\u003c/p>\n\u003cp>She believes tech investors will catch up.\u003c/p>\n\u003cp>\u003cstrong>‘Hack Your Employees’\u003c/strong>\u003cbr>\nDeming has a foot in both worlds. Her fund, which raised $22 million last year, is focused on biotech companies that do drug development the old-fashioned way, with patented molecules and clinical trials and interminable meetings with the FDA.\u003c/p>\n\u003cp>But her bio reads like Silicon Valley fan fiction.\u003c/p>\n\u003cp>Homeschooled in New Zealand, she became fascinated by the concept of aging when she was 8, wrapping her head around why her elderly grandmother could not do the same things as the rest of her family. At 11, she cold-emailed Cynthia Kenyon, a University of California, San Francisco, scientist renowned for her work in the field, and by 12, she had a job in Kenyon’s lab. Then, at 16, she enrolled at the Massachusetts Institute of Technology, from which she would, of course, drop out after two years in order to return to the Valley and become a VC.[contextly_sidebar id=\"EBaaTzfCuKbBQA4p0bc9SKblWtuWTEfX\"]\u003c/p>\n\u003cp>“Literally, I looked like a preteen, and I couldn’t talk to people,” she said of her early fundraising efforts. Now she’s 23, and Longevity Fund has stakes in five biotech startups.\u003c/p>\n\u003cp>One of them is Unity Biotechnology, a company hoping to blunt the effects of aging by targeting bodily cells that are too old to multiply. Unity President Ned David, in a leather motorcycle jacket and a painted-on Joy Division shirt, delivered a SXSW presentation that, while lively, was not dissimilar to what biotech companies do at investor conferences — here’s how our drug works and here’s how and when we’re going to test it.\u003c/p>\n\u003cp>And yet as David explained the long regulatory road awaiting his company as it worked through clinical trials, a man looked up from his MacBook Air to ask what “biohacks” — diets, sleep schedules, drugs used without a doctor’s OK — might do the exact same thing right now.\u003c/p>\n\u003caside class=\"pullquote alignright\">'Literally, I looked like a preteen, and I couldn’t talk to people.' \u003ccite>Laura Deming, Longevity Fund\u003c/cite>\u003c/aside>\n\u003cp>At SXSW, that’s a popular question. The day before, in a ballroom roughly four times as large as the one that hosted Unity, attendees packed in to ask the same question and hope for a different answer.\u003c/p>\n\u003cp>“I’m here to make the argument that you have a moral imperative, if you’re an employer, to hack your employees,” said Dave Asprey, founder of Bulletproof 360, during a session called “Would You Let Your Boss Biohack You?”\u003c/p>\n\u003cp>Asprey’s company sells products with names like Brain Octane Oil, containing supplements Silicon Valley calls \u003ca href=\"https://www.statnews.com/2016/02/19/brain-hackers-nootropics/\" target=\"_blank\" rel=\"noopener\">nootropics\u003c/a>, which are purported to enhance cognitive function. He is also a biohacker. That means he takes nootropics to improve his performance in life, refuses to ingest a long list of chemicals that includes fluoride, and averages six hours and six minutes of sleep every night. During his talk, Asprey was wearing sienna-toned sunglasses, which, he explained, were hacking the light.\u003c/p>\n\u003cp>At Bulletproof, every employee has access to nootropics and is encouraged to expand his or her mind accordingly.\u003c/p>\n\u003cp>Asprey is particularly fond of modafinil, which he calls “the Limitless drug” in reference to a 2011 movie in which Bradley Cooper finds a pill that makes him a genius. Sold under the brand name Provigil, modafinil got Asprey through the Wharton School, he said, and it has “the safety profile of ibuprofen,” a statement with which the Drug Enforcement Administration would disagree.[contextly_sidebar id=\"qF9rRUa2RjIaBihZWnAUPSxFoiPwZ5DN\"]\u003c/p>\n\u003cp>Hank Greely, a professor of biomedical ethics at Stanford, finds the whole thing a little absurd. Most nootropics are innocuous supplements with insufficient data to back up their claims but no safety risks that should preclude their use, he said.\u003c/p>\n\u003cp>As for modafinil, “it’s great for staying awake, and I guess staying awake is a cognitive enhancement,” Greely said. But clinical trials on stimulants like modafinil have led to mixed or negative results on whether drug-induced wakefulness actually makes people better at using their brains.\u003c/p>\n\u003cp>“The bad news is, right now the best thing we have is pretty much caffeine,” Greely said.\u003c/p>\n\u003cp>\u003cstrong>Meet Dr. Grasshopper\u003c/strong>\u003cbr>\nIf science might turn up its nose at the disruptors, some disruptors are prepared to return the favor.\u003c/p>\n\u003cp>Heshan Illangkoon is a self-diagnosed polymath who divides his time as an entrepreneur in residence at the University of Florida between astrobiology and synthetic biology. He goes by Dr. Grasshopper.\u003c/p>\n\u003cp>Among his scores of business ideas is one derived from surprisingly hairy mice. He and his fellow Ph.D. scientists dosed lab mice with a bunch of insulin and noticed that they began sprouting hair. When they took a look at the follicles, they realized it was the result of a hormone called IG1, which reared up in response to the insulin. Now they’ve got plans to whip up a hormone-laced gel they believe could safely replicate that phenomenon on the bald pates of humans.\u003c/p>\n\u003cp>“That’s a billion-dollar product right there,” Illangkoon said.\u003c/p>\n\u003cp>And what about the years-long process of getting FDA approval?\u003c/p>\n\u003caside class=\"pullquote alignright\">'If science might turn up its nose at the disruptors, some disruptors are prepared to return the favor.'\u003c/aside>\n\u003cp>Illangkoon responded with a not-fit-for-print suggestion for what could be done with the FDA. He then retrieved from the pocket of his pastel pink pants a handheld genome sequencer to demonstrate how new technology has democratized what had once been monopolized by the gatekeepers of Big Science.\u003c/p>\n\u003cp>On the floor of SXSW’s cavernous trade show, biotech wasn’t faring any better.\u003c/p>\n\u003cp>The crowd flocked to demonstrations of augmented reality machines and VR headsets, stepping around carpet-bound robots that promised to broadcast WiFi, stage a lightsaber duel, or just fetch a beer.\u003c/p>\n\u003cp>Away from the hordes, tucked in the southwest corner of the sprawling convention center were SXSW’s “health” exhibitors, a crop of personal genomics companies and medical data startups that attracted a fraction of the onlookers one can get with a dancing robot.\u003c/p>\n\u003cp>[contextly_sidebar id=\"YK3tCyprCw9U67hDxs8Ds6zbFCpwuA0L\"]\u003c/p>\n\u003cp>The only biotech exhibitor was Foregen, a company “promoting genital integrity through regenerative medicine,” according to the business card of Tyler Drozd, its lead director. That means using stem cells to turn foreskins from a donor into transplantable tissues for men who seeking to reverse their circumcisions or just otherwise want a new foreskin.\u003c/p>\n\u003cp>Is there a market for that? Drozd says there are 130 million men who “might be interested” in the U.S. alone.\u003c/p>\n\u003cp>“And there’s 3,000 more every day,” said Drozd, who uses air quotes when speaking the phrase “circumcision for medical reasons.”\u003c/p>\n\u003cp>Foregen is currently crowdfunded, but it’s working with “a Wall Street guy” to raise a Series A and hopes to start human clinical trials in 2019, Drozd said.\u003c/p>\n\u003cp>Outside, a man made laps around the conference on a motorized scooter, wearing a sign with the word “Circumcision” followed by emojis depicting vomiting, being sad, and weeping in agony, and ending with a simple directive: “YouTube that ish.”\u003c/p>\n\u003cp>His work was unrelated to Foregen’s.\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n\u003cp>\u003cem>This story was originally published by \u003ca href=\"https://www.statnews.com/2018/03/14/sxsw-biotech/\" target=\"_blank\" rel=\"noopener\">STAT\u003c/a>, an online publication of Boston Globe Media that covers health, medicine, and scientific discovery.\u003c/em>\u003c/p>\n\n","blocks":[],"excerpt":"The culture of Silicon Valley doesn’t always jibe with the realities of biotech. ","status":"publish","parent":0,"modified":1521074455,"stats":{"hasAudio":false,"hasVideo":false,"hasChartOrMap":false,"iframeSrcs":[],"hasGoogleForm":false,"hasGallery":false,"hasHearkenModule":false,"hasPolis":false,"paragraphCount":43,"wordCount":1654},"headData":{"title":"Biotech Tries To Break Bread With Silicon Valley’s Disruptors. It’s Awkward. | KQED","description":"The culture of Silicon Valley doesn’t always jibe with the realities of biotech. ","ogTitle":"","ogDescription":"","ogImgId":"","twTitle":"","twDescription":"","twImgId":"","schema":{"@context":"http://schema.org","@type":"Article","headline":"Biotech Tries To Break Bread With Silicon Valley’s Disruptors. It’s Awkward.","datePublished":"2018-03-14T23:45:32.000Z","dateModified":"2018-03-15T00:40:55.000Z","image":"https://cdn.kqed.org/wp-content/uploads/2020/02/KQED-OG-Image@1x.png"}},"disqusIdentifier":"440163 https://ww2.kqed.org/futureofyou/?p=440163","disqusUrl":"https://ww2.kqed.org/futureofyou/2018/03/14/biotech-tries-to-break-bread-with-silicon-valleys-disruptors-its-awkward/","disqusTitle":"Biotech Tries To Break Bread With Silicon Valley’s Disruptors. It’s Awkward.","source":"Startup Culture","nprByline":"Damian Garde\u003cbr />STAT News","path":"/futureofyou/440163/biotech-tries-to-break-bread-with-silicon-valleys-disruptors-its-awkward","audioTrackLength":null,"parsedContent":[{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003cp>The multitrillion-dollar drug industry is trying to disrupt with the kids, and it’s running into a communications gap.\u003c/p>\n\u003cp>At SXSW, the weeklong TED Talk with a music festival in there somewhere, biotech this week has been trying to elbow its way into a conference that has ceded most of its time to tech, with its promises of a currency revolution, Martian colonization, and a hack for anything that moves.\u003c/p>\u003cp>\u003c/p>\u003cp>\u003c/p>\n\u003cp>While Uber and Spotify hosted line-out-the-door events that fit the SXSW ethos, the drug industry’s efforts have mostly amounted to awkward attempts to speak the native language, like when Bristol-Myers Squibb, a 130-year-old pharmaceutical giant, tried to entice conference-goers with a session on “hacking childhood cancer.”\u003c/p>\n\u003cp>There was a biotech-focused panel on drugs to stop aging. And a steeped-in-science discussion of how new technologies might be used to boost brain performance. But each was dwarfed, in interest and attendance, by tech.\u003c/p>\n\u003cp>The reasons for the culture collision may be self-evident. No one told Larry Page he needed a placebo-controlled clinical trial to search the internet, and no one forced Mark Zuckerberg to endure a Food and Drug Administration inspection. Why should the would-be disruptors of biology play by biotech’s rules?\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"fullwidth"},"numeric":["fullwidth"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>At the same time, the culture of Silicon Valley — move quickly, break objects — doesn’t always jibe with the realities of biotech. Investment timelines are painfully long and scientific sparks more often than not go dim on closer inspection. California’s moneyed incumbents didn’t get rich off the life sciences.\u003c/p>\n\u003cp>“That phenomenon exists, pointing out that the tech VCs don’t have Ph.D.s,” said Laura Deming, founder of a biotech venture capital firm called Longevity Fund, based in San Francisco.\u003c/p>\n\u003cfigure id=\"attachment_129\" class=\"wp-caption alignleft\" style=\"max-width: 546px\">\u003cimg class=\" wp-image-129\" src=\"https://ww2.kqed.org/futureofyou/wp-content/uploads/sites/13/2014/09/Wojcicki.jpg\" alt=\"\" width=\"546\" height=\"410\" srcset=\"https://ww2.kqed.org/app/uploads/sites/13/2014/09/Wojcicki.jpg 640w, https://ww2.kqed.org/app/uploads/sites/13/2014/09/Wojcicki-400x300.jpg 400w, https://ww2.kqed.org/app/uploads/sites/13/2014/09/Wojcicki-320x240.jpg 320w\" sizes=\"(max-width: 546px) 100vw, 546px\">\u003cfigcaption class=\"wp-caption-text\">23andMe CEO Anne Wojcicki, speaking at the annual SXSW festival in Austin, Texas in March 2014. (Jenny Oh/KQED)\u003c/figcaption>\u003c/figure>\n\u003cp>But Deming believes the phenomenon is more a reflection of time than seriousness. Not long ago, biotech funds were staffed by investors who made money elsewhere and saw promise in the drug business.\u003c/p>\n\u003cp>“I talk to these biotech VCs and it’s like, ‘Look, guys, your lead partner is an investment banker,’” Deming said.\u003c/p>\n\u003cp>She believes tech investors will catch up.\u003c/p>\n\u003cp>\u003cstrong>‘Hack Your Employees’\u003c/strong>\u003cbr>\nDeming has a foot in both worlds. Her fund, which raised $22 million last year, is focused on biotech companies that do drug development the old-fashioned way, with patented molecules and clinical trials and interminable meetings with the FDA.\u003c/p>\n\u003cp>But her bio reads like Silicon Valley fan fiction.\u003c/p>\n\u003cp>Homeschooled in New Zealand, she became fascinated by the concept of aging when she was 8, wrapping her head around why her elderly grandmother could not do the same things as the rest of her family. At 11, she cold-emailed Cynthia Kenyon, a University of California, San Francisco, scientist renowned for her work in the field, and by 12, she had a job in Kenyon’s lab. Then, at 16, she enrolled at the Massachusetts Institute of Technology, from which she would, of course, drop out after two years in order to return to the Valley and become a VC.\u003c/p>\u003cp>\u003c/p>\u003cp>\u003c/p>\n\u003cp>“Literally, I looked like a preteen, and I couldn’t talk to people,” she said of her early fundraising efforts. Now she’s 23, and Longevity Fund has stakes in five biotech startups.\u003c/p>\n\u003cp>One of them is Unity Biotechnology, a company hoping to blunt the effects of aging by targeting bodily cells that are too old to multiply. Unity President Ned David, in a leather motorcycle jacket and a painted-on Joy Division shirt, delivered a SXSW presentation that, while lively, was not dissimilar to what biotech companies do at investor conferences — here’s how our drug works and here’s how and when we’re going to test it.\u003c/p>\n\u003cp>And yet as David explained the long regulatory road awaiting his company as it worked through clinical trials, a man looked up from his MacBook Air to ask what “biohacks” — diets, sleep schedules, drugs used without a doctor’s OK — might do the exact same thing right now.\u003c/p>\n\u003caside class=\"pullquote alignright\">'Literally, I looked like a preteen, and I couldn’t talk to people.' \u003ccite>Laura Deming, Longevity Fund\u003c/cite>\u003c/aside>\n\u003cp>At SXSW, that’s a popular question. The day before, in a ballroom roughly four times as large as the one that hosted Unity, attendees packed in to ask the same question and hope for a different answer.\u003c/p>\n\u003cp>“I’m here to make the argument that you have a moral imperative, if you’re an employer, to hack your employees,” said Dave Asprey, founder of Bulletproof 360, during a session called “Would You Let Your Boss Biohack You?”\u003c/p>\n\u003cp>Asprey’s company sells products with names like Brain Octane Oil, containing supplements Silicon Valley calls \u003ca href=\"https://www.statnews.com/2016/02/19/brain-hackers-nootropics/\" target=\"_blank\" rel=\"noopener\">nootropics\u003c/a>, which are purported to enhance cognitive function. He is also a biohacker. That means he takes nootropics to improve his performance in life, refuses to ingest a long list of chemicals that includes fluoride, and averages six hours and six minutes of sleep every night. During his talk, Asprey was wearing sienna-toned sunglasses, which, he explained, were hacking the light.\u003c/p>\n\u003cp>At Bulletproof, every employee has access to nootropics and is encouraged to expand his or her mind accordingly.\u003c/p>\n\u003cp>Asprey is particularly fond of modafinil, which he calls “the Limitless drug” in reference to a 2011 movie in which Bradley Cooper finds a pill that makes him a genius. Sold under the brand name Provigil, modafinil got Asprey through the Wharton School, he said, and it has “the safety profile of ibuprofen,” a statement with which the Drug Enforcement Administration would disagree.\u003c/p>\u003cp>\u003c/p>\u003cp>\u003c/p>\n\u003cp>Hank Greely, a professor of biomedical ethics at Stanford, finds the whole thing a little absurd. Most nootropics are innocuous supplements with insufficient data to back up their claims but no safety risks that should preclude their use, he said.\u003c/p>\n\u003cp>As for modafinil, “it’s great for staying awake, and I guess staying awake is a cognitive enhancement,” Greely said. But clinical trials on stimulants like modafinil have led to mixed or negative results on whether drug-induced wakefulness actually makes people better at using their brains.\u003c/p>\n\u003cp>“The bad news is, right now the best thing we have is pretty much caffeine,” Greely said.\u003c/p>\n\u003cp>\u003cstrong>Meet Dr. Grasshopper\u003c/strong>\u003cbr>\nIf science might turn up its nose at the disruptors, some disruptors are prepared to return the favor.\u003c/p>\n\u003cp>Heshan Illangkoon is a self-diagnosed polymath who divides his time as an entrepreneur in residence at the University of Florida between astrobiology and synthetic biology. He goes by Dr. Grasshopper.\u003c/p>\n\u003cp>Among his scores of business ideas is one derived from surprisingly hairy mice. He and his fellow Ph.D. scientists dosed lab mice with a bunch of insulin and noticed that they began sprouting hair. When they took a look at the follicles, they realized it was the result of a hormone called IG1, which reared up in response to the insulin. Now they’ve got plans to whip up a hormone-laced gel they believe could safely replicate that phenomenon on the bald pates of humans.\u003c/p>\n\u003cp>“That’s a billion-dollar product right there,” Illangkoon said.\u003c/p>\n\u003cp>And what about the years-long process of getting FDA approval?\u003c/p>\n\u003caside class=\"pullquote alignright\">'If science might turn up its nose at the disruptors, some disruptors are prepared to return the favor.'\u003c/aside>\n\u003cp>Illangkoon responded with a not-fit-for-print suggestion for what could be done with the FDA. He then retrieved from the pocket of his pastel pink pants a handheld genome sequencer to demonstrate how new technology has democratized what had once been monopolized by the gatekeepers of Big Science.\u003c/p>\n\u003cp>On the floor of SXSW’s cavernous trade show, biotech wasn’t faring any better.\u003c/p>\n\u003cp>The crowd flocked to demonstrations of augmented reality machines and VR headsets, stepping around carpet-bound robots that promised to broadcast WiFi, stage a lightsaber duel, or just fetch a beer.\u003c/p>\n\u003cp>Away from the hordes, tucked in the southwest corner of the sprawling convention center were SXSW’s “health” exhibitors, a crop of personal genomics companies and medical data startups that attracted a fraction of the onlookers one can get with a dancing robot.\u003c/p>\n\u003cp>\u003c/p>\u003cp>\u003c/p>\u003cp>\u003c/p>\n\u003cp>The only biotech exhibitor was Foregen, a company “promoting genital integrity through regenerative medicine,” according to the business card of Tyler Drozd, its lead director. That means using stem cells to turn foreskins from a donor into transplantable tissues for men who seeking to reverse their circumcisions or just otherwise want a new foreskin.\u003c/p>\n\u003cp>Is there a market for that? Drozd says there are 130 million men who “might be interested” in the U.S. alone.\u003c/p>\n\u003cp>“And there’s 3,000 more every day,” said Drozd, who uses air quotes when speaking the phrase “circumcision for medical reasons.”\u003c/p>\n\u003cp>Foregen is currently crowdfunded, but it’s working with “a Wall Street guy” to raise a Series A and hopes to start human clinical trials in 2019, Drozd said.\u003c/p>\n\u003cp>Outside, a man made laps around the conference on a motorized scooter, wearing a sign with the word “Circumcision” followed by emojis depicting vomiting, being sad, and weeping in agony, and ending with a simple directive: “YouTube that ish.”\u003c/p>\n\u003cp>His work was unrelated to Foregen’s.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"floatright"},"numeric":["floatright"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>\u003cem>This story was originally published by \u003ca href=\"https://www.statnews.com/2018/03/14/sxsw-biotech/\" target=\"_blank\" rel=\"noopener\">STAT\u003c/a>, an online publication of Boston Globe Media that covers health, medicine, and scientific discovery.\u003c/em>\u003c/p>\n\n\u003c/div>\u003c/p>","attributes":{"named":{},"numeric":[]}}],"link":"/futureofyou/440163/biotech-tries-to-break-bread-with-silicon-valleys-disruptors-its-awkward","authors":["byline_futureofyou_440163"],"series":["futureofyou_110"],"categories":["futureofyou_1062"],"tags":["futureofyou_1166","futureofyou_647","futureofyou_509","futureofyou_87","futureofyou_109","futureofyou_35","futureofyou_340"],"featImg":"futureofyou_440165","label":"source_futureofyou_440163"},"futureofyou_371437":{"type":"posts","id":"futureofyou_371437","meta":{"index":"posts_1591205157","site":"futureofyou","id":"371437","score":null,"sort":[1493017845000]},"guestAuthors":[],"slug":"post-theranos-can-silicon-valley-and-biomed-get-along","title":"Post-Theranos, Can Silicon Valley and Biomed Get Along?","publishDate":1493017845,"format":"standard","headTitle":"Startup Culture | KQED Future of You | KQED Science","labelTerm":{"term":110,"site":"futureofyou"},"content":"\u003cp>Oil and water. Plaid and polka dots. Fish and peanut butter. We all know these things don't go together.\u003c/p>\n\u003cp>It's worth asking how well the \"get in hard, cash out fast\" tech ethos \u003cem>du jour\u003c/em> fits in with the plodding, regulation-heavy culture of health care. It's a valid question in the wake of the \u003ca href=\"https://ww2.kqed.org/futureofyou/2016/07/14/the-rise-and-fall-of-theranos-a-cartoon-history/\">Theranos flameout,\u003c/a> in which a Silicon Valley entrepreneur with no medical background, lots of hype and very little scientific scrutiny raised copious venture backing to revolutionize blood testing, only to see the technology fail in market.\u003c/p>\n\u003cp>Tech culture rewards disruptors. And those who can pivot on a dime.\u003c/p>\n\u003cp>But the process of getting a new drug or medical device to market is long and convoluted, a necessary drag. There's the academic papers subject to peer review, the many stages of clinical testing and government approval. Yes, it all takes years, but\u003ca href=\"http://www.slate.com/articles/health_and_science/science/2017/04/science_is_not_a_free_market_endeavor.html\"> it makes the science transparent\u003c/a>.\u003c/p>\n\u003cp>By contrast, Theranos CEO Elizabeth Holmes was secretive about how the company's technology worked, and the venture firms that pumped millions into Theranos either didn't have the details, or weren't scientifically literate enough to ask the questions that might have raised red flags.\u003c/p>\n\u003caside class=\"pullquote alignright\">'I think Silicon Valley is used to this kind of thing: take an idea that isn’t fully formed and get it out into the world without validation, and maybe it fails later on.'\u003ccite>Dr. Norman Paradis, Darmouth College\u003c/cite>\u003c/aside>\n\u003cp>Stanford professor Dr. John Ioannidis \u003ca href=\"https://www.washingtonpost.com/news/to-your-health/wp/2015/07/03/the-insanely-influential-stanford-professor-behind-biotech-firms-push-to-get-fda-approval-it-probably-doesnt-need/?utm_term=.386a29abd2f8\">saw the red flags early on\u003c/a> --some that even non-scientists could have discovered.\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>\"So the first thing that I did as a researcher, as a scientist, is check the scientific literature,\" he recently\u003ca href=\"http://www.npr.org/sections/alltechconsidered/2016/05/02/475972922/biotechs-theranos-offers-a-cautionary-tale-for-silicon-valley\"> told NPR.\u003c/a> \"How much do we know about what they [Theranos] do? And I couldn't find even a single paper.\"\u003c/p>\n\u003cp>Dr. Norman Paradis is a professor of medicine at Dartmouth College who works as a consultant for diagnostic startups. He has given presentations to venture firms, and he says the fact that Theranos got hundreds of millions of dollars and went to market without proving itself makes it \"a Silicon Valley event, and not a biomedical event.\"\u003c/p>\n\u003cp>\"I think Silicon Valley is used to this kind of thing: take an idea that isn’t fully formed and get it out into the world without validation, and maybe it fails later on.\" Whereas in the biomedical field you almost always need to have data early on.\u003c/p>\n\u003cp>So what happened? The wrong people were asking the questions, says Paradis. \"If you look at the list of who invested in Theranos, none of the venture capitalists who regularly do biomedical diagnostics were investors,\" he says. The firms with relevant medical expertise steered clear. \"Normally you show up to present an idea to these firms, they really know what you're talking about,\" he added.\u003c/p>\n\u003cp>At a conference it hosted in January, The Economist asked a panel of venture capitalists about the broader perception of a culture clash between scientists and Silicon Valley entrepreneurs ... and the Theranos example, specifically. The panelists represented three firms that invest in life science and healthcare ventures: Lisa Suennen from\u003ca href=\"https://www.geventures.com/\"> GE Ventures\u003c/a>, David Sabow from\u003ca href=\"https://www.svb.com/\"> Silicon Valley Bank\u003c/a>, and Emily Melton from \u003ca href=\"https://dfj.com/\">DFJ Venture Capital\u003c/a>.\u003c/p>\n\u003cp>Here's the full video:\u003c/p>\n\u003cp>\u003c!-- iframe plugin v.4.3 wordpress.org/plugins/iframe/ -->\u003cbr>\n\u003ciframe width=\"560\" height=\"315\" src=\"https://www.youtube.com/embed/6GAZcb9jyT0\" frameborder=\"0\" scrolling=\"yes\" class=\"iframe-class\">\u003c/iframe>\u003c/p>\n\u003cp>The panelists agreed that some of the accepted rules that govern much of today's startup development and commercialization seem to run counter to those of science-based startups in medicine and biotech. And that there is a tension between the two sides.\u003c/p>\n\u003cp>\"It's a solution sell versus a product sell,\" said Melton from DFJ. \"Investors think of things as products, whereas people on the health care side think of solutions.\"[contextly_sidebar id=\"MhTn4bRZadvdRBhNxWpIi87Ako9TIWSD\"]\u003c/p>\n\u003cp>Suennen from GE Ventures agreed. \"On the tech side, people are practically allergic to providing services,\" she said. But in the case of health care, \"You can’t take the people out of caring for people.\"\u003c/p>\n\u003cp>And, said Suennen, the timelines involved are vastly different.\u003cstrong>\u003cbr>\n\u003c/strong>\u003c/p>\n\u003cp>\"In the health care world, the time horizon for investments to mature and exit is pretty long compared to other marketplaces – usually 7 to 10 years,\" Suennen added.\u003c/p>\n\u003cp>Melton noted that won't deter some venture firms from investing in health care. \"We’re willing to be more patient if we feel like there’s a great opportunity at the end,\" she said, adding that, \"We do need to have a clear path to commercialization.\"\u003c/p>\n\u003cp>Of course a startup can't come to market without jumping through the hoops -- specifically, the FDA approval process. That's why these panelists said regulation is a -- gasp! -- \u003cem>good\u003c/em> thing. \"You need regulation in health care, for the most part, to make the market grow,\" Suennen said.\u003c/p>\n\u003cp>Everyone on the panel agreed that the next big thing in digital health or biomedicine will not emerge until tech innovators and medical experts work together: venture companies need the new ideas from the tech side combined with the health care knowledge. And that's starting to happen.\u003c/p>\n\u003cp>Since most biomedical startups are still in early funding stages, it will take a few years to see a new model of collaboration emerge and produce significant breakthroughs in biomed.\u003c/p>\n\u003cp>\"You need that life sciences perspective to understand how has it been done, what works, what doesn’t -- in order to totally revolutionize it,\" said Sabow, from Silicon Valley Bank. \"People who are trying to do it without that multidimensional perspective are going to spend a lot of money, get a lot of buzz, but not necessarily have the revolutionary impact they’re hoping for.\"\u003c/p>\n\u003cp>There was some awkwardness when Melton was asked about Theranos. Her firm, DFJ, pumped $500,000 in seed money into the venture early on. Interestingly, she all but said that her firm did not have access to data from Theranos when they cut the check.\u003c/p>\n\u003cp>\"I think transparency is critical. You can’t mess around with people’s lives and you can’t put products out there without being very transparent about what you’re doing. Data is very critical, and letting people have access to the data.\"\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n\u003cp>The Theranos debacle has a \"tragic\" element that goes beyond hundreds of lost jobs and lost investment, says Paradis. For \u003ca href=\"https://www.forbes.com/sites/petercohan/2016/04/15/can-theranos-raise-new-capital/#6b421282406b\">$750 million\u003c/a>, you could have funded at least seven good startups, he says. \"It's almost impossible to get a complete new diagnostic test developed, because funders are so conservative [when it comes to medical products],\" he says. \"That’s even less likely to happen now.\"\u003c/p>\n\n","blocks":[],"excerpt":"Tech innovation can find common ground with scientific products in the health sector under certain conditions, VCs say.","status":"publish","parent":0,"modified":1493057767,"stats":{"hasAudio":false,"hasVideo":true,"hasChartOrMap":false,"iframeSrcs":[],"hasGoogleForm":false,"hasGallery":false,"hasHearkenModule":false,"hasPolis":false,"paragraphCount":28,"wordCount":1108},"headData":{"title":"Post-Theranos, Can Silicon Valley and Biomed Get Along? | KQED","description":"Tech innovation can find common ground with scientific products in the health sector under certain conditions, VCs say.","ogTitle":"","ogDescription":"","ogImgId":"","twTitle":"","twDescription":"","twImgId":"","schema":{"@context":"http://schema.org","@type":"Article","headline":"Post-Theranos, Can Silicon Valley and Biomed Get Along?","datePublished":"2017-04-24T07:10:45.000Z","dateModified":"2017-04-24T18:16:07.000Z","image":"https://cdn.kqed.org/wp-content/uploads/2020/02/KQED-OG-Image@1x.png"}},"disqusIdentifier":"371437 https://ww2.kqed.org/futureofyou/?p=371437","disqusUrl":"https://ww2.kqed.org/futureofyou/2017/04/24/post-theranos-can-silicon-valley-and-biomed-get-along/","disqusTitle":"Post-Theranos, Can Silicon Valley and Biomed Get Along?","customPermalink":"2017/04/13/post-theranos-can-silicon-valley-and-biomed-get-along/","path":"/futureofyou/371437/post-theranos-can-silicon-valley-and-biomed-get-along","audioTrackLength":null,"parsedContent":[{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003cp>Oil and water. Plaid and polka dots. Fish and peanut butter. We all know these things don't go together.\u003c/p>\n\u003cp>It's worth asking how well the \"get in hard, cash out fast\" tech ethos \u003cem>du jour\u003c/em> fits in with the plodding, regulation-heavy culture of health care. It's a valid question in the wake of the \u003ca href=\"https://ww2.kqed.org/futureofyou/2016/07/14/the-rise-and-fall-of-theranos-a-cartoon-history/\">Theranos flameout,\u003c/a> in which a Silicon Valley entrepreneur with no medical background, lots of hype and very little scientific scrutiny raised copious venture backing to revolutionize blood testing, only to see the technology fail in market.\u003c/p>\n\u003cp>Tech culture rewards disruptors. And those who can pivot on a dime.\u003c/p>\n\u003cp>But the process of getting a new drug or medical device to market is long and convoluted, a necessary drag. There's the academic papers subject to peer review, the many stages of clinical testing and government approval. Yes, it all takes years, but\u003ca href=\"http://www.slate.com/articles/health_and_science/science/2017/04/science_is_not_a_free_market_endeavor.html\"> it makes the science transparent\u003c/a>.\u003c/p>\n\u003cp>By contrast, Theranos CEO Elizabeth Holmes was secretive about how the company's technology worked, and the venture firms that pumped millions into Theranos either didn't have the details, or weren't scientifically literate enough to ask the questions that might have raised red flags.\u003c/p>\n\u003caside class=\"pullquote alignright\">'I think Silicon Valley is used to this kind of thing: take an idea that isn’t fully formed and get it out into the world without validation, and maybe it fails later on.'\u003ccite>Dr. Norman Paradis, Darmouth College\u003c/cite>\u003c/aside>\n\u003cp>Stanford professor Dr. John Ioannidis \u003ca href=\"https://www.washingtonpost.com/news/to-your-health/wp/2015/07/03/the-insanely-influential-stanford-professor-behind-biotech-firms-push-to-get-fda-approval-it-probably-doesnt-need/?utm_term=.386a29abd2f8\">saw the red flags early on\u003c/a> --some that even non-scientists could have discovered.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"fullwidth"},"numeric":["fullwidth"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>\"So the first thing that I did as a researcher, as a scientist, is check the scientific literature,\" he recently\u003ca href=\"http://www.npr.org/sections/alltechconsidered/2016/05/02/475972922/biotechs-theranos-offers-a-cautionary-tale-for-silicon-valley\"> told NPR.\u003c/a> \"How much do we know about what they [Theranos] do? And I couldn't find even a single paper.\"\u003c/p>\n\u003cp>Dr. Norman Paradis is a professor of medicine at Dartmouth College who works as a consultant for diagnostic startups. He has given presentations to venture firms, and he says the fact that Theranos got hundreds of millions of dollars and went to market without proving itself makes it \"a Silicon Valley event, and not a biomedical event.\"\u003c/p>\n\u003cp>\"I think Silicon Valley is used to this kind of thing: take an idea that isn’t fully formed and get it out into the world without validation, and maybe it fails later on.\" Whereas in the biomedical field you almost always need to have data early on.\u003c/p>\n\u003cp>So what happened? The wrong people were asking the questions, says Paradis. \"If you look at the list of who invested in Theranos, none of the venture capitalists who regularly do biomedical diagnostics were investors,\" he says. The firms with relevant medical expertise steered clear. \"Normally you show up to present an idea to these firms, they really know what you're talking about,\" he added.\u003c/p>\n\u003cp>At a conference it hosted in January, The Economist asked a panel of venture capitalists about the broader perception of a culture clash between scientists and Silicon Valley entrepreneurs ... and the Theranos example, specifically. The panelists represented three firms that invest in life science and healthcare ventures: Lisa Suennen from\u003ca href=\"https://www.geventures.com/\"> GE Ventures\u003c/a>, David Sabow from\u003ca href=\"https://www.svb.com/\"> Silicon Valley Bank\u003c/a>, and Emily Melton from \u003ca href=\"https://dfj.com/\">DFJ Venture Capital\u003c/a>.\u003c/p>\n\u003cp>Here's the full video:\u003c/p>\n\u003cp>\u003c!-- iframe plugin v.4.3 wordpress.org/plugins/iframe/ -->\u003cbr>\n\u003ciframe width=\"560\" height=\"315\" src=\"https://www.youtube.com/embed/6GAZcb9jyT0\" frameborder=\"0\" scrolling=\"yes\" class=\"iframe-class\">\u003c/iframe>\u003c/p>\n\u003cp>The panelists agreed that some of the accepted rules that govern much of today's startup development and commercialization seem to run counter to those of science-based startups in medicine and biotech. And that there is a tension between the two sides.\u003c/p>\n\u003cp>\"It's a solution sell versus a product sell,\" said Melton from DFJ. \"Investors think of things as products, whereas people on the health care side think of solutions.\"\u003c/p>\u003cp>\u003c/p>\u003cp>\u003c/p>\n\u003cp>Suennen from GE Ventures agreed. \"On the tech side, people are practically allergic to providing services,\" she said. But in the case of health care, \"You can’t take the people out of caring for people.\"\u003c/p>\n\u003cp>And, said Suennen, the timelines involved are vastly different.\u003cstrong>\u003cbr>\n\u003c/strong>\u003c/p>\n\u003cp>\"In the health care world, the time horizon for investments to mature and exit is pretty long compared to other marketplaces – usually 7 to 10 years,\" Suennen added.\u003c/p>\n\u003cp>Melton noted that won't deter some venture firms from investing in health care. \"We’re willing to be more patient if we feel like there’s a great opportunity at the end,\" she said, adding that, \"We do need to have a clear path to commercialization.\"\u003c/p>\n\u003cp>Of course a startup can't come to market without jumping through the hoops -- specifically, the FDA approval process. That's why these panelists said regulation is a -- gasp! -- \u003cem>good\u003c/em> thing. \"You need regulation in health care, for the most part, to make the market grow,\" Suennen said.\u003c/p>\n\u003cp>Everyone on the panel agreed that the next big thing in digital health or biomedicine will not emerge until tech innovators and medical experts work together: venture companies need the new ideas from the tech side combined with the health care knowledge. And that's starting to happen.\u003c/p>\n\u003cp>Since most biomedical startups are still in early funding stages, it will take a few years to see a new model of collaboration emerge and produce significant breakthroughs in biomed.\u003c/p>\n\u003cp>\"You need that life sciences perspective to understand how has it been done, what works, what doesn’t -- in order to totally revolutionize it,\" said Sabow, from Silicon Valley Bank. \"People who are trying to do it without that multidimensional perspective are going to spend a lot of money, get a lot of buzz, but not necessarily have the revolutionary impact they’re hoping for.\"\u003c/p>\n\u003cp>There was some awkwardness when Melton was asked about Theranos. Her firm, DFJ, pumped $500,000 in seed money into the venture early on. Interestingly, she all but said that her firm did not have access to data from Theranos when they cut the check.\u003c/p>\n\u003cp>\"I think transparency is critical. You can’t mess around with people’s lives and you can’t put products out there without being very transparent about what you’re doing. Data is very critical, and letting people have access to the data.\"\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"floatright"},"numeric":["floatright"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>The Theranos debacle has a \"tragic\" element that goes beyond hundreds of lost jobs and lost investment, says Paradis. For \u003ca href=\"https://www.forbes.com/sites/petercohan/2016/04/15/can-theranos-raise-new-capital/#6b421282406b\">$750 million\u003c/a>, you could have funded at least seven good startups, he says. \"It's almost impossible to get a complete new diagnostic test developed, because funders are so conservative [when it comes to medical products],\" he says. \"That’s even less likely to happen now.\"\u003c/p>\n\n\u003c/div>\u003c/p>","attributes":{"named":{},"numeric":[]}}],"link":"/futureofyou/371437/post-theranos-can-silicon-valley-and-biomed-get-along","authors":["8664"],"series":["futureofyou_110"],"categories":["futureofyou_1"],"tags":["futureofyou_1246","futureofyou_26","futureofyou_814","futureofyou_617","futureofyou_340"],"collections":["futureofyou_1097"],"featImg":"futureofyou_215272","label":"futureofyou_110"},"futureofyou_3027":{"type":"posts","id":"futureofyou_3027","meta":{"index":"posts_1591205157","site":"futureofyou","id":"3027","score":null,"sort":[1432049436000]},"guestAuthors":[],"slug":"a-caution-for-would-be-digital-health-entrepreneurs","title":"A Caution for Would-be Digital Health Entrepreneurs","publishDate":1432049436,"format":"standard","headTitle":"Startup Culture | KQED Future of You | KQED Science","labelTerm":{"term":110,"site":"futureofyou"},"content":"\u003cp>\u003cem>This is a perspective from Halle Tecco, founder and managing director of digital health venture fund \u003ca href=\"http://rockhealth.com/\">Rock Health\u003c/a>.\u003c/em>\u003c/p>\n\u003cp>One of the biggest mistakes would-be digital health entrepreneurs make is building a product based on what they think needs to be fixed in healthcare, irrespective of what the industry is willing to buy.\u003c/p>\n\u003cp>\u003ca href=\"http://rockhealth.com/2015/01/digital-health-funding-tops-4-1b-2014-year-review/\">Investment in digital health surpassed $4.1 billion\u003c/a> in 2014, nearly the total of the past three years combined. But many of the most promising startups are failing to get off the ground.\u003c/p>\n\u003cp>Too few entrepreneurs have grasped the distinction between a product that a physician would love to use and a product that is so critical to the business that a hospital is willing to pay for it.\u003c/p>\n\u003cp>\u003cstrong>Defining a 'Death by Pilot'\u003c/strong>\u003c/p>\n\u003cp>[ad fullwidth]\u003c/p>\n\u003cp>It’s not all that difficult for “nice-to-have” digital health products to land pilots in today’s spaghetti-against-the-wall environment. Pilots are essentially test-runs of a product, for which the potential customer or partner often doesn't pay.\u003c/p>\n\u003cp>In fact, entire units are being established at hospitals just to test new startup concepts. Some hospitals even flip the customer relationship and charge the startup cash or equity to conduct a pilot.\u003c/p>\n\u003cp>Many of these startups never scale beyond the initial pilot. Digital health investors often refer to this as \"death by pilot.\"\u003c/p>\n\u003cp>If you're a digital health entrepreneur or thinking of starting a company, here are some questions to ask yourself to avoid falling victim to this scenario:\u003c/p>\n\u003cp>\u003cstrong>Why are you Piloting Your Product?\u003c/strong>\u003c/p>\n\u003cp>A \"proof of concept\" or \"validation\" pilot is a provisional agreement to test the technical capabilities and value proposition of a product in a controlled manner.\u003c/p>\n\u003cp>In academic medical settings, these pilots are often used in research. Some academic medical centers have standard “unfunded research collaboration” agreements, where a Principal Investigator (or \"PI\") at the university agrees to collaborate on a short-term research project with a startup. In exchange for the time and effort of that researcher, he or she is given the rights to publish any findings.\u003c/p>\n\u003cp>A validation pilot is often critical for a company introducing a new technology. Validation pilots reduce the technology risk for investors and future customers. The results of a pilot are sometimes valuable for marketing purposes. But a validation pilot should not be confused for a real customer relationship.\u003c/p>\n\u003cp>\u003cstrong>Do you Really Know Your Customer?\u003c/strong>\u003c/p>\n\u003cp>It's very important to make sure you are working with someone at your target customer organization who is invested in and capable of taking your product as far as possible. I suggest finding a champion who is directly responsible for implementing new technologies which can reduce administrative overhead or improve the patient experience.\u003c/p>\n\u003cp>The ideal person is someone who has business and finance responsibilities, and views pilots as just the first phase of a larger partnership. Try to talk to department-heads or executives, like a chief executive or chief medical officer. Avoid groups that are solely focused on research, IT, or worse yet -- departments with the entire business model to make money off startups.\u003c/p>\n\u003cp>I also recommend asking questions early on about which departmental budget you will be paid from, so there's no confusion later down the line. Realize that you'll be working with slow, bureaucratic organizations. To grow quickly, reduce the number of staff-members that need to sign off on your product.\u003c/p>\n\u003cp>Take\u003ca href=\"http://kitcheck.com/\" target=\"_blank\"> Kit Check\u003c/a>, a digital health company that specializes in helping hospitals manage inventory in an internal pharmacy. Their product has three components: RFID tags for each medication, a scanning machine, and cloud-based software.\u003c/p>\n\u003cp>[Editors' Note: Kit Check is a \u003ca href=\"http://rockhealth.com/\" target=\"_blank\">Rock Health\u003c/a> portfolio company. The author is a cofounder of Rock Health.]\u003c/p>\n\u003cp>Originally, the Kit Check team sold the scanning machine which required the approval and budgets of procurement, IT, and the Head of Pharmacy. They quickly switched to giving the scanning machine away for free and only charging for the RFID tags, which only requires approval from the Head of Pharmacy. By making this shift, Kit Check has been able to scale to almost 200 hospitals in less than three years.\u003c/p>\n\u003cp>\u003cstrong>Are You Getting Paid?\u003c/strong>\u003c/p>\n\u003cp>Only pursue deals where both parties are willing to invest the time and resources to succeed. If a hospital is unwilling to pay, then they are either the wrong customer or you’re selling the wrong product. It’s not sustainable for any company to work on projects without compensation. Additionally, if another potential customer finds out you’ve worked for free, they could demand the same.\u003c/p>\n\u003caside class=\"pullquote alignright\">“If a hospital truly doesn’t have money to compensate your company for a valuable service or product, they are probably not a good target and you should move on.\"\u003c/aside>\n\u003cp>Remind yourself that if the customer really values your product, they should be paying you and not the other way around. At Rock Health, we’ve been seeing more of these so-called pilots, where startups are actually paying organizations to pilot their product. I’d suggest limiting your free pilots to one. If you do a complimentary pilot, make sure you are getting paid in other tangible ways, such as having the rights to use that hospital’s name and validation results on your sales materials, or having them make introductions to other customers and serving as a reference.\u003c/p>\n\u003cp>If a hospital truly doesn’t have money to compensate your company for a valuable service or product, they are probably not a good target and you should move on.\u003c/p>\n\u003cp>\u003cstrong>Is Your Deal an Opt-Out or Opt-In Contract?\u003c/strong>\u003c/p>\n\u003cp>If you have no other option than to offer an unpaid pilot, structure the pilot as part of a multiphase agreement with clearly defined milestones leading to a paid customer agreement.\u003c/p>\n\u003cp>Multi-phased, definitive sales contracts are up-front agreements that give each partner in the deal the choice to opt-out if certain milestones are not met. These contracts align the business goals of both parties. It’s a larger upfront commitment from the customer, but it also ensures that a startup will get paid if the product works as promised. These agreements also help startups focus on the product and implementation itself, rather than the sales process.\u003c/p>\n\u003cp>I'm optimistic about startups’ ability to get their foot in the door at large hospitals in today’s innovation-positive climate. But entrepreneurs should always consider the long-term sustainability and scalability of pilots before signing on the dotted line. Validation from a top-tier medical center is impressive, but a list of multiple, unpaid pilots on a fundraising deck is a \"death by pilot\" waiting to happen. When going to market and working in the healthcare industry, make sure both sides are aligned and ready to scale.\u003c/p>\n\u003cp>[ad floatright]\u003c/p>\n\u003cp>\u003cem>Thanks to Rock Health entrepreneurs Chris DeNoia, Tim Kress-Spatz, Christine Lemke, and Ian Shakhil for sharing ideas for this article.\u003c/em>\u003c/p>\n\n","blocks":[],"excerpt":"Many young and promising digital health startups are falling into the trap of securing 'pilots' -- not paying customers -- and thus, they struggle to get off the ground. ","status":"publish","parent":0,"modified":1434048273,"stats":{"hasAudio":false,"hasVideo":false,"hasChartOrMap":false,"iframeSrcs":[],"hasGoogleForm":false,"hasGallery":false,"hasHearkenModule":false,"hasPolis":false,"paragraphCount":31,"wordCount":1178},"headData":{"title":"A Caution for Would-be Digital Health Entrepreneurs | KQED","description":"Many young and promising digital health startups are falling into the trap of securing 'pilots' -- not paying customers -- and thus, they struggle to get off the ground. ","ogTitle":"","ogDescription":"","ogImgId":"","twTitle":"","twDescription":"","twImgId":"","schema":{"@context":"http://schema.org","@type":"Article","headline":"A Caution for Would-be Digital Health Entrepreneurs","datePublished":"2015-05-19T15:30:36.000Z","dateModified":"2015-06-11T18:44:33.000Z","image":"https://cdn.kqed.org/wp-content/uploads/2020/02/KQED-OG-Image@1x.png"}},"disqusIdentifier":"3027 http://ww2.kqed.org/futureofyou/?p=3027","disqusUrl":"https://ww2.kqed.org/futureofyou/2015/05/19/a-caution-for-would-be-digital-health-entrepreneurs/","disqusTitle":"A Caution for Would-be Digital Health Entrepreneurs","path":"/futureofyou/3027/a-caution-for-would-be-digital-health-entrepreneurs","audioTrackLength":null,"parsedContent":[{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003cp>\u003cem>This is a perspective from Halle Tecco, founder and managing director of digital health venture fund \u003ca href=\"http://rockhealth.com/\">Rock Health\u003c/a>.\u003c/em>\u003c/p>\n\u003cp>One of the biggest mistakes would-be digital health entrepreneurs make is building a product based on what they think needs to be fixed in healthcare, irrespective of what the industry is willing to buy.\u003c/p>\n\u003cp>\u003ca href=\"http://rockhealth.com/2015/01/digital-health-funding-tops-4-1b-2014-year-review/\">Investment in digital health surpassed $4.1 billion\u003c/a> in 2014, nearly the total of the past three years combined. But many of the most promising startups are failing to get off the ground.\u003c/p>\n\u003cp>Too few entrepreneurs have grasped the distinction between a product that a physician would love to use and a product that is so critical to the business that a hospital is willing to pay for it.\u003c/p>\n\u003cp>\u003cstrong>Defining a 'Death by Pilot'\u003c/strong>\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"fullwidth"},"numeric":["fullwidth"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>It’s not all that difficult for “nice-to-have” digital health products to land pilots in today’s spaghetti-against-the-wall environment. Pilots are essentially test-runs of a product, for which the potential customer or partner often doesn't pay.\u003c/p>\n\u003cp>In fact, entire units are being established at hospitals just to test new startup concepts. Some hospitals even flip the customer relationship and charge the startup cash or equity to conduct a pilot.\u003c/p>\n\u003cp>Many of these startups never scale beyond the initial pilot. Digital health investors often refer to this as \"death by pilot.\"\u003c/p>\n\u003cp>If you're a digital health entrepreneur or thinking of starting a company, here are some questions to ask yourself to avoid falling victim to this scenario:\u003c/p>\n\u003cp>\u003cstrong>Why are you Piloting Your Product?\u003c/strong>\u003c/p>\n\u003cp>A \"proof of concept\" or \"validation\" pilot is a provisional agreement to test the technical capabilities and value proposition of a product in a controlled manner.\u003c/p>\n\u003cp>In academic medical settings, these pilots are often used in research. Some academic medical centers have standard “unfunded research collaboration” agreements, where a Principal Investigator (or \"PI\") at the university agrees to collaborate on a short-term research project with a startup. In exchange for the time and effort of that researcher, he or she is given the rights to publish any findings.\u003c/p>\n\u003cp>A validation pilot is often critical for a company introducing a new technology. Validation pilots reduce the technology risk for investors and future customers. The results of a pilot are sometimes valuable for marketing purposes. But a validation pilot should not be confused for a real customer relationship.\u003c/p>\n\u003cp>\u003cstrong>Do you Really Know Your Customer?\u003c/strong>\u003c/p>\n\u003cp>It's very important to make sure you are working with someone at your target customer organization who is invested in and capable of taking your product as far as possible. I suggest finding a champion who is directly responsible for implementing new technologies which can reduce administrative overhead or improve the patient experience.\u003c/p>\n\u003cp>The ideal person is someone who has business and finance responsibilities, and views pilots as just the first phase of a larger partnership. Try to talk to department-heads or executives, like a chief executive or chief medical officer. Avoid groups that are solely focused on research, IT, or worse yet -- departments with the entire business model to make money off startups.\u003c/p>\n\u003cp>I also recommend asking questions early on about which departmental budget you will be paid from, so there's no confusion later down the line. Realize that you'll be working with slow, bureaucratic organizations. To grow quickly, reduce the number of staff-members that need to sign off on your product.\u003c/p>\n\u003cp>Take\u003ca href=\"http://kitcheck.com/\" target=\"_blank\"> Kit Check\u003c/a>, a digital health company that specializes in helping hospitals manage inventory in an internal pharmacy. Their product has three components: RFID tags for each medication, a scanning machine, and cloud-based software.\u003c/p>\n\u003cp>[Editors' Note: Kit Check is a \u003ca href=\"http://rockhealth.com/\" target=\"_blank\">Rock Health\u003c/a> portfolio company. The author is a cofounder of Rock Health.]\u003c/p>\n\u003cp>Originally, the Kit Check team sold the scanning machine which required the approval and budgets of procurement, IT, and the Head of Pharmacy. They quickly switched to giving the scanning machine away for free and only charging for the RFID tags, which only requires approval from the Head of Pharmacy. By making this shift, Kit Check has been able to scale to almost 200 hospitals in less than three years.\u003c/p>\n\u003cp>\u003cstrong>Are You Getting Paid?\u003c/strong>\u003c/p>\n\u003cp>Only pursue deals where both parties are willing to invest the time and resources to succeed. If a hospital is unwilling to pay, then they are either the wrong customer or you’re selling the wrong product. It’s not sustainable for any company to work on projects without compensation. Additionally, if another potential customer finds out you’ve worked for free, they could demand the same.\u003c/p>\n\u003caside class=\"pullquote alignright\">“If a hospital truly doesn’t have money to compensate your company for a valuable service or product, they are probably not a good target and you should move on.\"\u003c/aside>\n\u003cp>Remind yourself that if the customer really values your product, they should be paying you and not the other way around. At Rock Health, we’ve been seeing more of these so-called pilots, where startups are actually paying organizations to pilot their product. I’d suggest limiting your free pilots to one. If you do a complimentary pilot, make sure you are getting paid in other tangible ways, such as having the rights to use that hospital’s name and validation results on your sales materials, or having them make introductions to other customers and serving as a reference.\u003c/p>\n\u003cp>If a hospital truly doesn’t have money to compensate your company for a valuable service or product, they are probably not a good target and you should move on.\u003c/p>\n\u003cp>\u003cstrong>Is Your Deal an Opt-Out or Opt-In Contract?\u003c/strong>\u003c/p>\n\u003cp>If you have no other option than to offer an unpaid pilot, structure the pilot as part of a multiphase agreement with clearly defined milestones leading to a paid customer agreement.\u003c/p>\n\u003cp>Multi-phased, definitive sales contracts are up-front agreements that give each partner in the deal the choice to opt-out if certain milestones are not met. These contracts align the business goals of both parties. It’s a larger upfront commitment from the customer, but it also ensures that a startup will get paid if the product works as promised. These agreements also help startups focus on the product and implementation itself, rather than the sales process.\u003c/p>\n\u003cp>I'm optimistic about startups’ ability to get their foot in the door at large hospitals in today’s innovation-positive climate. But entrepreneurs should always consider the long-term sustainability and scalability of pilots before signing on the dotted line. Validation from a top-tier medical center is impressive, but a list of multiple, unpaid pilots on a fundraising deck is a \"death by pilot\" waiting to happen. When going to market and working in the healthcare industry, make sure both sides are aligned and ready to scale.\u003c/p>\n\u003cp>\u003c/p>\u003c/div>","attributes":{"named":{},"numeric":[]}},{"type":"component","content":"","name":"ad","attributes":{"named":{"label":"floatright"},"numeric":["floatright"]}},{"type":"contentString","content":"\u003cdiv class=\"post-body\">\u003cp>\u003c/p>\n\u003cp>\u003cem>Thanks to Rock Health entrepreneurs Chris DeNoia, Tim Kress-Spatz, Christine Lemke, and Ian Shakhil for sharing ideas for this article.\u003c/em>\u003c/p>\n\n\u003c/div>\u003c/p>","attributes":{"named":{},"numeric":[]}}],"link":"/futureofyou/3027/a-caution-for-would-be-digital-health-entrepreneurs","authors":["8619"],"series":["futureofyou_172","futureofyou_110"],"categories":["futureofyou_1"],"tags":["futureofyou_333","futureofyou_335","futureofyou_341","futureofyou_334","futureofyou_338","futureofyou_80","futureofyou_337","futureofyou_339","futureofyou_336","futureofyou_340"],"featImg":"futureofyou_3188","label":"futureofyou_110"}},"programsReducer":{"possible":{"id":"possible","title":"Possible","info":"Possible is hosted by entrepreneur Reid Hoffman and writer Aria Finger. 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You ask the questions. You decide what Bay Curious investigates. 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Hosted by journalists of color, the show tackles the subject of race head-on, exploring how it impacts every part of society — from politics and pop culture to history, sports and more.\u003cbr />\u003cbr />\u003cem>Life Kit\u003c/em>, which will be in the second part of the hour, guides you through spaces and feelings no one prepares you for — from finances to mental health, from workplace microaggressions to imposter syndrome, from relationships to parenting. The show features experts with real world experience and shares their knowledge. Because everyone needs a little help being human.\u003cbr />\u003cbr />\u003ca href=\"https://www.npr.org/podcasts/510312/codeswitch\">\u003cem>Code Switch\u003c/em> offical site and podcast\u003c/a>\u003cbr />\u003ca href=\"https://www.npr.org/lifekit\">\u003cem>Life Kit\u003c/em> offical site and podcast\u003c/a>\u003cbr />","airtime":"SUN 9pm-10pm","imageSrc":"https://cdn.kqed.org/wp-content/uploads/2024/04/Code-Switch-Life-Kit-Podcast-Tile-360x360-1.jpg","meta":{"site":"radio","source":"npr"},"link":"/radio/program/code-switch-life-kit","subscribe":{"apple":"https://podcasts.apple.com/podcast/1112190608?mt=2&at=11l79Y&ct=nprdirectory","google":"https://podcasts.google.com/feed/aHR0cHM6Ly93d3cubnByLm9yZy9yc3MvcG9kY2FzdC5waHA_aWQ9NTEwMzEy","spotify":"https://open.spotify.com/show/3bExJ9JQpkwNhoHvaIIuyV","rss":"https://feeds.npr.org/510312/podcast.xml"}},"commonwealth-club":{"id":"commonwealth-club","title":"Commonwealth Club of California Podcast","info":"The Commonwealth Club of California is the nation's oldest and largest public affairs forum. As a non-partisan forum, The Club brings to the public airwaves diverse viewpoints on important topics. The Club's weekly radio broadcast - the oldest in the U.S., dating back to 1924 - is carried across the nation on public radio stations and is now podcasting. Our website archive features audio of our recent programs, as well as selected speeches from our long and distinguished history. 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You can also visit the MindShift website for episodes and supplemental blog posts or tweet us \u003ca href=\"https://twitter.com/MindShiftKQED\">@MindShiftKQED\u003c/a> or visit us at \u003ca href=\"/mindshift\">MindShift.KQED.org\u003c/a>","imageSrc":"https://cdn.kqed.org/wp-content/uploads/2024/04/Mindshift-Podcast-Tile-703x703-1.jpg","imageAlt":"KQED MindShift: How We Will Learn","officialWebsiteLink":"/mindshift/","meta":{"site":"news","source":"kqed","order":"2"},"link":"/podcasts/mindshift","subscribe":{"apple":"https://podcasts.apple.com/us/podcast/mindshift-podcast/id1078765985","google":"https://podcasts.google.com/feed/aHR0cHM6Ly9mZWVkcy5tZWdhcGhvbmUuZm0vS1FJTkM1NzY0NjAwNDI5","npr":"https://www.npr.org/podcasts/464615685/mind-shift-podcast","stitcher":"https://www.stitcher.com/podcast/kqed/stories-teachers-share","spotify":"https://open.spotify.com/show/0MxSpNYZKNprFLCl7eEtyx"}},"morning-edition":{"id":"morning-edition","title":"Morning Edition","info":"\u003cem>Morning Edition\u003c/em> takes listeners around the country and the world with multi-faceted stories and commentaries every weekday. 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