What Telehealth Founders Need To Know
As Told by the Founders of K Health, Ro, Tia, Perry Health, Paloma Health, Allara, Curex, Hone, and Calibrate
This past week, we rolled out Primary’s first telehealth thesis, the beginning of a new set of conversations about how and why we invest in this space. In developing this work, we recorded dozens of interviews with founders, operators, and investors. Here, we share a round-up of some of the best advice we heard for founders from founders.
Curious to learn more or swap ideas about digital health? Reach out to me at firstname.lastname@example.org or @jasonrshuman on Twitter. And don't miss the rest of this series, which includes my framework for evaluating telehealth investments, an inside look at our favorite digital health trends, guidance on north star metrics, and an in-depth founder interview series.
On picking your investors
“Not all investors are created equal. Look for a well rounded cap table, not a well rounded investor. You’re building the Avengers, not a team of pretty-good-in-many-areas.”
“I would say for any round, whether it's your first round or your third round, you want to start building relationships and get to know those people well ahead of time. I think the worst thing you could do is take the first money you get without really feeling confident in who the people are behind the money and whether they'll be able to add any other value long-term.”
On being a healthcare founder
“While the healthcare industry is ripe for disruption, that’s because most of these problems are harder to solve than you expect. Do it only if your heart's in it and you have great co-founders! It’s a long, challenging—but exhilarating— journey.”
“Healthcare is very different from e-commerce. If you want to expand into a new state, that's a whole set of regulations and issues. If you want to do marketing on Facebook, you have to be careful about what you're saying and how you're saying it. So, I would say be prepared that it can be a bit more frustrating than some other areas, and also move slower because of that. But, there's a reason for all of that. And that's because at the end of the day people's lives are at stake and we want to make sure that we're doing everything safely. So I'd say be prepared to be frustrated, but understand that there's a reason behind it.”
On engaging with customers
“Speak with your patients, constantly. Their relationship with your brand is ultimately what will determine your success, and if there is something causing a breakdown in trust, you need to move quickly to fix that. These are humans trusting you with their health and wellbeing, and that trust needs to be acknowledged and reflected in all processes.”
“As you're building your company, be really, really, really involved with patient care from the onset and understanding all the nuances even if you don't have a medical background, because that'll help you understand the problems that you're going to have to figure out how to solve as you scale the company.”
On building a moat
“Something I’ve learned over the course of my pitching process is that investors love defensible businesses that can’t be easily replicated. Sometimes defensibility comes from a multitude of small advantages built over time.”
On learning the landscape
“Understand the flow of money. Only by doing so can you understand the incentives that drive the behavior of every stakeholder. Too many healthcare organizations are not incentivized to respond to the needs of patients because the patient is not their customer. My advice is to make sure you don’t lose sight of the interests of the most important stakeholder, the reason we all do this in the first place: the patient.”
“Be obsessed with the regulatory and compliance landscape, as unsexy as it is, because it will make sure that your business has longevity.”
“Hire someone who knows what they're talking about. I think we waited too long at Tia to bring in someone who really knew what they were talking about with respect to payers. It's just so complex and such an insider's game that it's not one of those things that non-healthcare founders should just go figure out on their own.”
On information sharing
“Many healthcare founders are dealing with the same problems. For example, I was going through this whole big debate about whether to build an EMR vs. buy an EMR. And which EMR would we build? And I was very lucky that multiple engineers and founders at other telehealth startups, who had made that decision already, were willing to talk with me and share their perspective. I think sometimes people get worried that it's competitive, but healthcare is so big. We're all dealing with so many similar issues that it's really valuable to have other people, especially in New York, who you can reach out to and get advice. So I would say don't be afraid to ask for help or thoughts from other people in the industry because chances are they've solved a similar problem.”
On choosing between D2C vs. B2B
“We had to make a choice between D2C and B2B in our early days and we came up with this framework: If you’re building a virtual-first specialty clinic similar to Paloma Health, ask yourself 2 questions: (1) do payers care about this condition (cost of care is high), and (2) can I create a value based care model that will save them a significant amount of money?
If the answer is yes to both, you can go to payers first and/or go D2C. If your answer is no to one of these 2 questions, then focus on your D2C strategy for now. Payers’ mindsets are shifting and conditions with a lower cost of care will have their chance very soon. But, make sure that patients’ pain points are strong enough to drive them to your solution! (access to care, quality of care, convenience,...)”
On selecting KPIs
“We need to be careful not to get caught up in the wrong type of KPIs, whether they're financial or operational because they don't always tell the full story. You need to always remember the ‘why’ behind what you're trying to do.”
On tuning out the noise
“I worked for Chris Burch, an amazing, life-long entrepreneur and investor. He always told me to “ignore the noise.” As a founder, I’m constantly collecting other people’s perspectives, but I have to remind myself to ignore the noise, ignore the people who don’t believe in the mission, and focus on the task at hand.”
On fundraising and pitching
“A few quick hits:
- Have instant recall for all of your core metrics
- It’s not an investor’s fault if they “don’t get it”. It’s yours.
- Cost of capital can be a structural advantage if you know you’ll need a lot of it. Treat fundraising and investor relationships accordingly.
- Raise more than you think you’ll need.
- Acknowledge and attack your businesses weaknesses head on; don’t pretend they don’t exist.”
—Zach Reitano from Ro