October 02, 2014|Categories: More Disruption Please
This week we held the 4th annual More Disruption Please (MDP) conference, an event where health IT entrepreneurs come together from across the country, with a strong focus on promoting partnership, openness and, of course, disruptive innovation in the health care space. We created this year’s conference based on feedback from the 70 health IT entrepreneurs from the 2013 MDP conference, who wanted to know about two things: selling and fundraising. Our keynote addresses, athenahealth CEO Jonathan Bush, and Rock Health Managing Director Malay Gandhi, spoke to both.
The day began with Jonathan as Blake, Alec Baldwin character from Glengarry Glen Ross, advising everyone to, first and foremost, “Always be closing!”
Topic #1: Selling
Health care is an unusually difficult market to sell into — between government regulation, consolidation and market behemoths constantly highlighting the risks of doing things differently, ways that innovators can make money is narrowly prescribed.
Still, as Jonathan pointed out, there’s a compelling opportunity, within a giant market that has many unmet needs and untapped potential for improvement.
Innovators are needed to disrupt the space, but the odds are stacked against them. Potential clients are looking for continuity and reliability, yet disruptive companies are all about risk. Beyond partnering with MDP, which offers best-in-breed innovations to the athenahealth network of providers, who should an innovator sell to –and how?
Jonathan broke the customer universe into three types:
- Preservers: Established institutions that just want to preserve themselves. They initially dominated the market and are stuck in what Jonathan calls “the upper right quadrant conundrum.”
His advice: Sell to preservers rarely. And when you do, sell at the periphery and during changes in leadership. The best approach with preservers is to help them cut their non-clinical costs and stay independent.
- Newbies: Organizations with new, capitalized care delivery models that will profit through scale and access.
His advice: These are the best customers but they are few and far between – get to them early and give it away if you have to.
- Transformers: The ambitious and creative of the old generation. This type of customer discovered that being a preserver won’t get them far. The catholic systems and for-profit systems, for example, are ripe to be transformers.
His advice: the same as Alec Baldwin’s, of course! Use AIDA (attention, interest, decision and action) to get the sale cycle moving faster. Sell to Transformers at inflection points and go straight to the functional leaders.
And in terms of when health care disruptors should sell, Jonathan’s advice is simple: All the time!
Topic #2: Fundraising
Malay Gandhi’s started his session out by reflecting on what’s undoubtedly been a record breaking year for health IT venture funding, with 2014 year-to-date funding at around $3 billion, surpassing all previous records.
Malay was critical of how a lot of companies are spending the money they raise — dumping it into sales and marketing efforts is grossly inefficient, when the average time to close a deal is nearly eight months.
This painful sales cycle degrades entrepreneurial happiness, causing innovators to wonder if they should stay in the space at all. Malay’s prescription to companies stuck in this rut is to get your goals straight: First, be a happier entrepreneur, and second, make your enterprise company more attractive.
Malay then used four Rock Health companies to support sales models that can yield strong economics for startups and help to trigger the changes above.
- The self-service model
Allows customers to buy and transact directly without interacting with a sales agent, followed by support for paying customers.
Example: Aptible, a private cloud deployment platform built to automate HIPAA compliance for web and mobile digital health companies.
- The bottom-up model
Allows individual users to enjoy the product for free, while organizations pay for the product.
Example: Benchling, a life science data management and collaboration platform. Academic researchers use Benchling apps for free, while enterprise customers pay per seat.
- The true SaaS model
Allows you to sell to mid-level executives from their own operating budget with a quick implementation (e.g., low to no cost), so you can bypass the CxOs.
Example: Kit Check, a cloud solution for automating the processing of hospital pharmacy kits.
- The co-option model
Allows you to commercially exploit known models and processes in health care, including clinical protocols, evidence dissemination, and billing procedures, reducing marketing, sales, and implementation friction.
Example: Omada Health, a digital therapeutics company whose first product, Prevent, is based on the landmark Diabetes Prevention Program trial.
No matter the option you choose, you need to prioritize your goals!
Finally, Malay’s closing point truly resonated with me. Finding a cloud-based platform to help distribute a new product or service is easier than trying to build the market! This is the perfect representation of the work we do through More Disruption Please — helping innovative high-potential companies scale across our network of providers, lowering the barriers of entry and access.
Jonathan and Malay’s sessions on the current state of the sales process in health care IT gave companies and investors a lot of information and perspective to mull over. It set the perfect foundation for an exciting week in Maine at the 2014 MDP conference, among the brightest in the space, as we discuss how best to disrupt and scale in the health care space.
And one message has continuously risen to the top: If you are building a company, be thoughtful about how you spend and how you sell. And no matter what stage you are at, always be closing!
Follow all the buzz coming out of this year’s MDP conference on Twitter at #MDP14.