Steve Blank needs no introduction as the man who started up the Lean Startup movement (in case you need one, find it here on his blog). But, you may not be aware that he has taken significant interest in entrepreneurship in life sciences, digital health, and healthcare. He teaches entrepreneurship in these realms at UCSF and the National Science Foundation (NSF). Very recently, in fact, the White House announced in August that it is “scaling up” the “rigorous entrepreneurship training program” that Steve has developed, called I-Corps.
Steve was generous enough to make some time to discuss healthcare innovation and entrepreneurship recently with me. We talked about a variety of things, including general entrepreneurial principles for building a successful company. In an effort to craft my transcript more toward health care professionals, I urge you to read his book, The Startup Owner’s Manual, for more on his fundamental entrepreneurial principles. I have distilled below some of the pearls Mr. Blank shared about healthcare entrepreneurship.
Jonathan O’Donnell, Medgadget: What are some of the qualities of a successful healthcare innovator based upon your experience with the participants in your UCSF course, Lean Launchpad for Life Sciences & Healthcare?
Steve Blank: The fundamental qualities of a successful innovator are common to every domain. Successful innovators are agile, relentless, curious, passionate, pragmatic, and focused, to name a few. But there are some unique qualities for health care innovators. As one example, the good thing about clinicians versus, say, material science engineers is that those who practice healthcare recognize that they don’t completely know something, and are more open to hypothesis-testing than those in other domains. This is the same for successful entrepreneurs, who are more amenable to testing many hypotheses.
Successful healthcare innovators are domain experts. The business of healthcare is not intuitively obvious to those outside of healthcare. There are many more moving parts, such as product-market fit, regulation, intellectual property, reimbursement, clinical trials – all those things that are on the “left side” of the Business Model Canvas – whereas, in other domains, once you find product market fit, you are off to the races. And all of this changes depending on if you are working on health software, diagnostics, devices, etc.
Medgadget: Your blog recently hosted a guest post about the 7 Deadly Healthcare Startup Sins. In what specific ways have you seen clinicians succeed or fail in healthcare entrepreneurship? What can aspiring clinician-entrepreneurs learn from these examples?
Steve Blank: I have seen success and failure begin with 1) clear definitions of the startup end-game and 2) expectations for how to get there. If you are a clinician or researcher, delivering care is different from building a company. On Day 1, you have to candidly ask yourself, “what is my goal?” Is it to build a successful company that lasts for 15 years? Or to build a company and sell it? Or to “change” medicine and you don’t care how it gets done but you wish to dedicate your life to it and you don’t care if it is profitable? Really, what IS your objective? Ask yourself how does your objective get done in your particular field. For example, there is no way you will build a standalone company in implantables, but you may be bought. Understanding that on Day 1 that is the end point is crucial to objective and subjective success. Most clinicians don’t think about this coming out of the hospital. I often give the example of the chief of surgery at UCSF. He had been in the lab working on a device for couple of years, but had no idea how revolutionary it was. However, he had no idea about the FDA’s pre-market approval, clinical trials to run, the amount of capital he needs, etc. He abandoned his idea, stating, “I have other stuff to do and if this is what it takes to bring it to market….” That’s one end of the spectrum.
Moreover, in healthcare, it is often not even clear who the customer is. For instance, I often run a classroom exercise with students – “say you consider a hip replacement because grandma needs help. Can she acquire the hip herself, or perform the hip replacement surgery? No, a doctor does. But how does the doctor get the hip? Does grandma or the doctor pay for the hip? Well, insurance pays for it, reimbursing the doctor. And a device company may supply the hip.” So, within this 90-second Socratic dialogue, students understand that it is tricky in healthcare to figure out who the customer is – grandma is the least important part of the process. In this hypothetical example, an entrepreneur is building new replacement hips is not building a better hip for grandma, but building a better hip for payers. You have to know who your customer is, which can be different from the end-user, supplier, etc. It can be very confusing in healthcare.
Medgadget: How should one approach designing an MVP (minimum viable product) in an industry that requires perfection, that often can literally be a matter of life or death?
Steve Blank: Let’s consider an implantable device. True, you can’t make a half-assed heart valve, but you can spend a lot of time with clay models or different materials for your prototype. Then you go talk to the surgeons and listen to their description for how they practically perform the surgery with those pieces and listen to feedback like, “gee, this material is not biocompatible with x or y.” For you to think that your MVP is a fully functional device misses the point. The goal of the MVP is to maximize learning at that specific point in time and development.
What about therapeutics – how do you make half of a cancer drug? Well, have you talked to Merck and discussed their pipeline? They may say they have four similar drugs to the one you propose, but they have nothing addressing a particular area, and you could collaborate. In therapeutics, what we find is if you are on the right target, you can a partner with Pharma to produce a product in 18 months rather than 10 years on your own.
And in healthcare software, there is no excuse for not building MVPs.
Again, thinking about your MVP as a finished version or working prototype is misunderstanding its point for learning. You should think of the lean process as an iterative “clinical trial” of your business model, learning all along the way.
Medgadget: What curricular elements do you feel are missing from health professions education that should be instilled in order to drive successful and effective healthcare innovation and entrepreneurship?
Steve Blank: Humility! (chuckling) – I have a great video of when we challenged this passionate clinician:
“thank you for your opinion – we don’t matter how smart you are – you haven’t talked to anyone else – well I’m an MD/PhD – well, welcome to the room, so is everyone else, welcome to the real deal!”
As a given, as a clinician, you are the smartest person in the hospital or building. That’s fine. But it doesn’t matter! There’s no way you are smarter than the collective intelligence of your potential customers. That’s the whole core of entrepreneurship! Unless you are the core person yourself who buys and will use it, your belief is just an opinion. You, in fact, have a faith-based enterprise rather than a company.
The best class for a physician who wants to start a company is a lean startup class (you could start with my massive open online course hosted by Udacity). In such a class, you will learn to start talking to customers, users, partners, payers, and get out of your clinical environment – and you may be stunned that your understanding of your defined Need may not be shared by others. The lean startup methodology doesn’t guarantee success, but it moves you much closer.