“It’s X for Y”

“It’s X for Y”

Every angel has heard a pitch like the above. I recently saw a pitch on “LinkedIn for Pets”. Huh???  This means of comparison has become so cliché, and so laughable, that there’s a random startup generator to do this—click here and refresh a few times, you’ll see what I mean. (Thanks to Alex at Biff Labs, one of the many cool DogPatchLabs Cambridgecompanies, for the link.)

But it’s with good reason—people tend to, maybe even NEED to, compartmentalize ideas, and investors who only hear a quick elevator pitch need a memorable tag line in order to remember the concept. Localmind, one of my favorite phone apps and startups, is “Quora meets Foursquare.” I’ve got no complaints with short, sweet and clear. Synthesis is beautiful.

Or so I was reflecting when I came across this article by Don Ross of HealthTech Capital, talking about a change in the risk/reward in healthcare. (Quick sidelight—his partner, Anne DeGheest, did a wonderful podcast with Frank Peters on “mentor capital”.) One of Don’s theses, which I oversimplify but agree with, is that it is safer for angels to invest in simple, cross-sector areas in healthcare not requiring large capital or complicated approvals.  In other words, bring x to y.

How often is an advance nothing more than bringing something pedestrian from one sector and applying it to another? It works for everything from complicated math proofs, to securities lending (my old firm, eSecLending, changed an industry by bringing simple tricks from the fixed income world into the old, stodgy ways of custodial bank back offices,) to mixed martial arts, to healthcare. Or as Don Ross puts it, “health tech”.

There is no more important force in healthcare than IT, but the state of the art at least for patients and recordkeeping is appalling. Institutionally, there have been advances;  think how computers use brute force to help model drugs (note Google Ventures’involvement with AdiMab, where Google can add more value than just money), then compare how little progress has been made in standardizing consumer health records. How many readers can access their records online as easily as they can access their brokerage statements? According to my view, the best opportunities to both advance healthcare and make money as an investor are as prosaic, but necessary, as creating middleware to connect various medical records, reimbursement codes, and insurance companies.

And just as these new companies require bringing different skills to bear to solve old problems, I’m hoping that good opportunities exist to translate from one area to another. This, I think, is why I was invited to be a panelist at CareInnovators’ HealthTech 2011 conference on Friday May 13th in Boston. While I’ve invested in half a dozen healthcare companies (never without availing myself of some due diligence of my MD/researcher wife,) I’m basically a guy who never took science after junior year of high school.  Still, I recognize the similarities between, say, scaling systems and creating middleware between different vendors to be used in securities lending, versus the same technology opportunity in electronic health records. So I can see the value of assembling a few of us “healthcare outsiders” to compare sectors, wonder “what if…” and “why don’t…”

I’m really excited to be on the panel with Esther Dyson, who has gone from being the doyenne of tech gurus to an involved healthcare investor. (We both are investors in GreenGoose, which is pairing inexpensive sensors with rewards and games to create healthy behaviors. Mixing X with Y and Z.) Esther, I’m sure, has thought longer and harder about these confluences than I have, and I hope to learn a lot from her and the other mix of health & technology aficionados at the event .  It’s also interesting to see that the chairman of the conference is Charles Huang, who is at Spark Capital (known for its savvy bets in the confluence of tech, media, and entertainment sectors) to help explore and identify opportunities in the $2.6 trillion healthcare space that leverage technology in a meaningful way. When you have a translator who can speak two languages, well, good things are likely to result.

To me, the most exciting intersecting space is the use of mobile phone technologies to change healthcare. One entire panel is devoted to this topic (innovations in mobile health) at the HealthTech conference, with companies ranging from big data collector and analyzerGinger.io, to a consumer product like Runkeeper (which I’m using to track my jogs.)

There are many prominent angel and VC investors (like Don Dodge here and Mark Suster here) who posit that one needs deep domain knowledge to make money via startup investing. I’m betting the opposite—depth is great, but breadth may be even greater: what you need enough of a broad, “liberal arts”-style understanding so as to identify when one can transfer what’s proven useful in one area to apply it in another area. It doesn’t always make sense (like “rock opera”). But certain people can put together disparate and non-obvious combinations. Harry Markowitz won a Nobel Prize for being the first to bring mathematical and statistical rigor to portfolio management. Other genius can be found in combinations as simple as Reese’s Peanut Butter cups or as complex and subtle as fusion cuisine. So I welcome all the inventors, technologists and investors who are crossing over from healthcare to IT, or vice versa. I’m betting the next big wins are not new discoveries, but new combinations. Like X and Y.

6 thoughts on ““It’s X for Y”

  1. Christopher Martinez Reply

    Thank you for basically summarizing my entire business plan. Not for healthcare, but you nailed it. I’m the outsider working with two deep domain guys, and I’ve had to open their eyes to how big the opportunity we’re working on is. Middleware for an $841B industry. Found your blog throughout the Mass Challenge LinkedIn Group, looking forward to reading more, and hopefully crossing paths one day.

  2. Soe - VocalPress Reply

    Hi Ty,

    I like your insight on crafting an elevator pitch. I am iterating my pitch for a startup I am working on – http://VocalPress.org – “Google Voice for rural communities”

    I tried pitching VocalPress as “WordPress with voices for rural communities” in the past.

    I am passionate about innovating around mobile space to solve social issues in developing countries. VocalPress uses proven technologies and practices of web 2.0 in developed countries. These are then applied, remixed and packaged to solve social issues and limitations in developing countries. That is how VocalPress was started.

    It is an entry in the second round of MassChallenge. We have created a 5 min video here http://bit.ly/dZzDcY

    We are seeking for endorsements too. If you like our entry, please hit us.


  3. Bryan Ducharme Reply

    Well stated. As a 20 year IT veteran, I saw basic tools like databases, application development, data mapping, communications, etc. get more and more powerful and flexible with each generation. Advances were often driven by demand in a specific industry and early generations tended to somewhat industry-specific, but the natural evolution of the tools was to become more generic and applicable elsewhere. Some industries have matured with high levels of standardization (the key to wide spread adoption) and automation while others are mired in their traditions. Healthcare is definitely in the later category. The main reason, in my opinion, is the relative lack of competition in health care. As an industry there are high levels of tradition-bound collusion. As we (hopefully) shift the healthcare industry to more outcome-driven payment systems, the pressure to adopt best practices from other industries will accelerate. IT will be the single largest force in this shift. The tools and techniques are there and, increasingly, the will is there too. Huge opportunities in healthcare IT….even for people and companies without decades of experience in that particular industry.

  4. Sunil Patro Reply

    Hi Ty,

    You exactly got it right as the new elevator pitch seems to be: “X for Y”. Just a few days ago, I was thinking of writing about this trend and had assembled a few tag lines from angel.co startup profiles. Here are a few examples:

    DailyGobble (Priceline for Restaurants)
    Gobbler (Dropbox for media creators)
    Groupiter (Yammer for creative project teams.)
    Pipedrive (If Apple designed Salesforce.com)
    CityPockets (Mint.com meets StubHub for Daily Deals)
    Rayku (eBay for college tutoring.)
    Munchery (Uber for food.)
    Vayable (Airbnb meets Kiva for travel experiences.)

    As long as it is right Y that can take an inspiration from X, there will be true innovation as one of the TED talks mentions: sex of ideas from two different industries or products usually brings out an unique and innovative outcome.

    1. Sunil Patro Reply

      Hi Ty,

      I also loved the post on your investing thought process for cardmunch. thanks for sharing it.

      I am the founder of EasySignMobile- a mobile focused startup enabling signing documents from smartphones. Recently, Bijan @ Spark Capital talked about EasySign on his blog at http://bijansabet.com/post/5932696549/mobile-only.

      I would love to chat with your about our startup and get your thoughts and advice.

      Sunil Patro
      Founder and CEO | http://easysignmobile.com

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