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June 2009
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August 2009

Pay as you go Health IT

According to this article, Health IT projects require hefty investments.   I'm going to have to disagree with Dr. Caitlin Cusack.   Maybe current Health IT projects do, but that doesn't mean they have to.   Your two cost factors are the actual hardware / software you use and the cost of training your people.

I believe that the customers should invest nothing for the software.   Just like you can get "pay as you go" mobile phones, Health IT should be delivered as "pay as you go".   How?

Build it in the cloud and scale horizontally.  It's not hard or expensive to build a system for a 3,000 patient clinic.  But instead of designing a massive silo (aks, for 10,000 customers, deploy 10,000 cloud servers.    And then just charge when the customer actually uses the thing.  Which will keep you on your toes at all times.

As for hardware, it doesn't take much.   A great netbook or desktop costs $300-$400 and you can set up secure wireless for $100 per building.   So you can automate a 5 physician office with a total investment of $5-$10K.  Because all the heavy lifting is done in the cloud (aka Amazon Web services, my favorite).  And you can run a dedicated server 24/7 with a lot of storage for less than $1,000 a year with zero installation costs.

And deployment (where the real costs are) should be done in an iterative fashion.  Prototype, pilot, repeat until satisfied.  Then expand.

This is a different way of looking at things.  When I was at Baxter Healthcare, conventional wisdom said all IT projects were heavily invested in, took many months (or over a year) to get implemented and then get everyone trained.  Working in the divisions I was rolling out new applications in 6 weeks.   And that was 25 years ago.

Prototype, pilot, repeat.

Funding a Startup

I dropped a note to an associate of mine telling him we were closing our Series A (it's the seed round).   And he asked how did we do it.

That got me to thinking about what the key factors where. This of course assumes you've got all the fundamentals down: product, market, barriers to entry, cash flow break-even analysis and management.

1) Find people who are as passionate as you, are thought leaders and are willing to put their own money in.   No one wants to be first.  They all ask "if this is so good, why am I the first?" .  This is key.

2) Show significant progress while you're talking to investors.   This can be a 3-6 month process easily.  During that time, can you show more development, more customer interest?   I've said this before, but execution is the new strategy.  

3) Be generous.  In your business plan, be generous to your customers and their customers.  Be generous to your investors.   And I mean real generous.   Founders are their own worse enemies.   They want control, they want to minimize dilutions (they're sitting at home playing with spreadsheets and PowerPoints as we speak).   The only good idea is one that is used.   By the time a liquidity event happens, the vast majority of founders end up with 8-15% of the company.  So why are you fighting to have 60%.   You don't ever get to keep it.   Show your investors how they get 1,000% ROI in 4 years with very low sales numbers.  Set that bar so low you can fall over it and make it.

4) Be at the right place at the right time with the right people.  

Service Breakdown: The Case of Nordstrom

It is really important that you have consistency across your organization dealing with customers.  Zappos comes to mind.  You would think Nordstrom would be good at Aa this, but I guess that doesn't apply to Utah.   I have had issues with them before.   Just last month I wrote a customer comment card with my contact information.  Did anyone follow up?  No.

Shoe shopping wasn't much better.  They didn't have the right size.  The sales person gave us a list of stores who carried them but explained "We don't do transfers, you'll have to go online."  I thought this was fishy so I went to customer service who said "We don't do transfers, you'll have to go online."  Hmmmm, this must have come from the store manager.

So I went online.  Guess what?  The online store didn't have the correct size.  So I did an online chat and explained my situation.  The person was horrified that our Utah store didn't contact the stores who had the shoes.  So she contacted them and 10 minutes later a store in Maryland called and shipped us the shoes.

Nordstrom built a new store here.  I think they need a new store manager to go with it.