Health 2.0 2010 – Two Perspectives, One Attendee
I attended my second Health 2.0 conference in San Francisco last week and find myself suffering from multiple personality disorder as a result. My multiples (only 2) are the geeky, health policy, propeller-head Ben; and the Investor Chair Ben. Allow me to share both views.
What an amazing ecosystem (or is it an incubator)!:
Health 2.0 is easily the most forward-thinking conference I attend, and the sense of energy and excitement there amazes me. I even started following a Twitter feed for the first time! Yes, it’s a bit like the Internet conferences I attended in the dotcom days, but there’s much more of a focus on empowering patients, improving decision making and making healthcare better.
Unlike the e-health conferences of yore, while investors do attend, they’re not throwing money around. With over 1,000 attendees and close to 50 sponsors this year, the conference is clearly a success. Kudos to Matthew and Indu (who I actually think might be the best entrepreneurs in the room) for putting it together and creating a bit of a sandbox in which people can play.
Another industry veteran and I were musing that it has a similar feel (albeit smaller scale and way hipper) to the Microsoft Healthcare Users Group (MS-HUG) conferences we used to attend about a decade ago. That is to say, it’s an outstanding networking and business development venue. Yes, the term ecosystem was way overused, but there’s a degree of earnestness that I find alternately annoying and endearing.
As expected given the 2.0 theme, many of the “companies” are focusing on social networking and “user generated healthcare”. I’m not sure if tweeting what I eat or posting how many steps I take will change my behavior, but a number of the other attendees seemed to think so.
Bottom line for this Ben is, as a very smart entrepreneur turned venture capitalist observed, “Health 2.0 is a great chance to catch the vibe and see what people are thinking about five years out.” He went on, however, to say he’d likely invest elsewhere for the next few years as he waited for the market to catch up. This brings us to what did Investor Chair Ben think.
Let the Angels Sing (Because the VCs Aren’t Likely To)
Yes, some of the sessions had interesting ideas, but I couldn’t shake the 90s Internet conference feel. Too many companies were more into showcasing how edgy and disruptive they were, then how lucrative, proprietary or sustainable they were. There’s this tone of self-congratulation that I find off-putting (but maybe I’m just old!).
While I wasn’t able to attend the DC to VC conference the day before (another part of Health Innovations Week), chatting with some folks from a major publisher who did, I was told that none of the pitches they heard talked about a business model or how they’d make money. Of the companies I saw or spoke with that did have a business model, as with last year, too many were focused on advertising revenue or were just too small in scale to attain institutional financing. That, perhaps, is part of the appeal and charm of Web 2.0 in general. It allows someone to develop a website or app in their loft or garage and perhaps make a few hundred thousand dollars a year doing it, quit their day jobs working for the Man and, best of all, in this case, improve the health status of a sizable number of people in the process.
This shoestring/boot strap ability is great and exciting, but it typically does not create something an institutional investor who wants to generate returns for their funds’ investors (and themselves) is likely to care about, hence my conflicting viewpoints. Did I see a few companies that were likely institutionally backable? Yes, but with the criteria of having reasonably high entry barriers and/or capable of generating $10-20 million in EBITDA (earnings before interest, taxes, depreciation and amortization – a key financial metric used by investors), I’d say less than five. It not being a venture forum event, I will decline to name them, but I’d be surprised if they were EMRs solely for iPads (how long will it take NextGen, Sage or AdvancedMD to develop their own?) or a service that allows me to get a text message of my last STD status to prove I’m healthy before I hook up (though the founder of Qpid.me did a great pitch).
Trying to integrate my two personalities, I’ll observe the following about Health 2.0 and its eponymous conference:
Health 2.0 is real and becoming mainstream. Sponsors included Cerner, RelayHealth (aka McKesson), OptumHealth (part of United, sister of Ingenix), and Sage (fka Medical Manager). These aren’t companies jumping on the bandwagon or trying for some gloss either; for the most part they have a commitment.
Part of the power and excitement are the low entry barriers and the ability to bootstrap on a shoestring (Inga, just which is the right footwear metaphor here?) For minimal cost and time, a developer or entrepreneur can make a difference in people’s health status/quality/access…
I’ll close with a link to a very worthwhile Forbes article written by some of the best HCIT VCs in the business. In addition to athenahealth, they’re currently invested in four private companies that I personally find fascinating. Their lessons learned are well worth noting.
Ben Rooks spent ten years as a sell-side equity analyst covering HCIT and related sectors before spending six years as an investment banker where he closed transactions ranging from $40 to 365 million. Seeking to make an honest living, he then founded ST Advisors, LLC where he works with healthcare companies and their sponsors, most often on issues around strategy, financing, and outcomes/exit planning. After all this time, he still can’t wait for HIMSS!