CEO: Here's my postmortem on Healthrageous

By MHN Staff
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Rick Lee, CEO, HealthrageousBy Rick Lee, Founder and former CEO, Healthrageous

I was so impressed with former CEO Dave Dickinson’s postmortem on Zeo, which MobiHealthNews published in May, that I wanted to offer a similar reflection on Healthrageous.

1) BHAG: Our big, hairy, audacious goal (apologies to Tom Peters) was possibly as ambitious as boiling the ocean. David Kirchoff eloquently delineated the necessary components for a successful weight loss program in his keynote at the Center for Connected Health Symposium last month when he concluded that you have to do it all… social networks, self monitoring, setting and publicizing goals, getting active, device integration, incentives/rewards, adopting better nutrition, etc. Throw in the need to provide an experience that caters to the user’s preferred user interface (i.e., snail mail, SMS text, mobile, voice, video, and web) and you have turned a simple business model – getting people healthier – into a complex execution assignment. Hence, rifle shot solutions don’t achieve sustained weight loss and population health management.

2) Seat-of-your-pants Financing vs. Institutional Investing. As soon as you take institutional money, the clock starts ticking. We took down $6 million in our Series A round on May 27, 2010. By the third week in September of that year, we began serving Mass Eye & Ear with a workplace wellness solution. Had we been more deliberate in getting our mousetrap working well before building our top line, I suspect we may have had different results. With clients, we needed staff to support them and salespeople to get the next wave of clients, adding to operating costs and increasing burn.

3) When to Exit. We all know that IPOs are not as plentiful as they once were. Since most exits are now through strategic acquisitions, the search for the right partner needs to be initiated much sooner than what we did with Healthrageous. I suspect Massive Health and BodyMedia made a much more successful transition than we did. I know that in my comings and goings, I encountered more than two dozen firms that represented a 1+1=3 opportunity for Healthrageous, but I wasn’t programmed to consider that option.

4) Behavioral Economics. Firms talk about their special strengths. Every entrepreneur who is seeking to succeed with users needs to be ensconced in the literature of behavioral economics. It is that understanding that permits you to develop really cool solutions for the predictably irrational, as opposed to making something that works for you and a dozen or so "young invincibles".

5) Regulatory Naiveté. I have encountered a number of solutions that – in my estimation – are not comporting with FDA guidelines; yet these firms persist with no responses from the FDA. The same applies to HIPAA and the movement of unencrypted Protected Health Information (PHI) in the marketplace. It gives me pause to reflect on how much we devoted to compliance, while others acted naively and without inhibition. Either that strong hand of the law will come down on the bad guys or score one for ignoring the conservative approach and attempting to carve your own path in the health care ecosystems.

6) Managing to Software Release Deadlines. It’s difficult to ignore the problems besetting Healthcare.gov: Tardy. Lacking key functionality. Poor tactical/strategic calls (i.e., you need to enroll in order to shop). I failed to hit three to four key release deadlines. That inevitably forced us into the endgame situation that ensued.

7) Finally, and most importantly, this is about entrepreneurial insight. Solving a problem that you have may not address a market need. There have been more than 100 solutions created for the Quantified Selves, which make up somewhere from 2 percent to 8 percent of our population. Conversely, the chronic disease population, which has more than 100 million adults, has had very few solutions prepared specifically for them. As Willy Sutton famously said, “I rob banks, cause that’s where the money is.” To succeed in today’s environment, you must be thinking about the unwell, where the money is.

Since 2009 Rick Lee served as a founder and CEO of Healthrageous, a company that was acquired by Humana earlier this year. Lee is now taking on an executive chairman role for Rockville, MD-based M3, a behavioral health assessment screen for primary care settings. He is also an active board member at Integra Health Management, a dual eligible management firm in Owings Mills, MD. Finally, he contributes insights to Hickory Ridge Capital, a boutique firm investing in early stage health care service companies, as its Chief Imagineer.