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The Digital Health Trap of Scaling it Before You Nail it


I was a digital health entrepreneur for the last seven years and have now dedicated myself to helping support other digital health entrepreneurs in building sustainable businesses.  It matters for all the reasons that we know healthcare is desperately in need of innovation.  If you want to build a digital health business, you have to be ready for a long haul and the biggest risk is that you will try to scale the business prematurely.

Scaling a business prematurely means that you are building a team of non-critical headcount before you have demonstrated that there is sufficient demand for your service When you’re selling to large healthcare institutions, they want to see that you are well capitalized and have a big team that can support them.  It’s a trap. Venture investors will drive you toward that trap because they want to push you to move as quickly as possible to show traction and market leadership.  If you thread the needle and emerge as a market leader, then the idea is that you will reap the benefits.  But it’s a trap.

Here is how to avoid the Digital Health Trap:

Pick one or two ideal early customers. Early customers are important.  The RIGHT early customers will make or break you.  They will work with you collaboratively, give feedback and help you apply your capability to not just them, but the market as a whole.

Customer develop, don’t product develop. You are going to want to build product naturally.  There is nothing like seeing technology at work, but if it’s pointed against the wrong value proposition then you’re going to fail.  Customer development is rigorous and intentional interviewing with a target segment based on a hypothesis, and a feedback loop to make sure that learning gets infused back into the organization.  I’m a big fan of these three tools:

Obsess! It’s that simple.  Digital health companies are notorious for wanting to solve a major healthcare structural problem.  They end up trying to boil the ocean.  It feels like narrowing scope will narrow opportunity, but it is exactly the opposite.  Say no 10x more times than you say yes and you will benefit.

Know Your Environment. Businesses gain and lose energy based on how they adapt to the environment.  There are so many regulations and structural impediments that your amazing, innovative idea just simply will not take off because the entropy of the environment is just too heavy.  Ask the hard questions early and strive for the objections vs. the confirmations.

Nail it! Nailing it is defined as measurably solving a problem for a paying customer who is willing to be a strong reference for you.  Often times, the dollars you spend are working on scaling it before you have nailed it.  Be patient to nail it.  It took us a long time to get in this healthcare mess.  We are not going to unwind it in just a few years.

The digital health execution trap is real.  We understand it intimately.  It is why we founded Stride, to help digital health companies focus their resources on the critical things that matter so they can demonstrate that the impact they wanted to make when they started their business, will have an opportunity to do so.

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