Tech entrepreneurs must start with 'Why'
“Understanding not only what you do, but also why you do it before starting a company will allow you to evolve and iterate better and faster,” writes Yoni Stein, CEO and co-founder of Laguna Health
Find a problem worth solving:
Just as people are cognitively prone to believe that others are just like them, entrepreneurs may overestimate the prevalence of the problem that they want to solve. I started Laguna Health together with my partner Yael Adam from a personal obsession. Both of us have been traumatized: I lost my mother-in-law, and Yael, a former Olympic athlete, went through multiple surgeries and struggled to recover. The first step of our journey was to ensure that post-hospitalization recovery is a problem experienced by many people that has costly implications, and is therefore worth solving.
Deeply understand the stakeholders’ incentives:
The key stakeholders in international markets are often significantly different than those in Israel, as are their incentives. For instance, while the main stakeholders in Israel’s healthcare ecosystem are the government, HMOs, and hospitals, the American market is much more complex. Different groups receive their health benefits from different sources. The largest of them is the working age population: 155 million Americans receive their health benefits through employer-sponsored health plans. Thus, for digital health companies targeting the working-age population, the potential customers are employers and insurance companies. Identifying these key players and fully understanding their motives is crucial in successfully navigating such an incentive-driven landscape.
Organize the data until it tells a story:
While the digital health market is data-rich, it often lacks insights that tell a story. The opportunity for founders is to organize this data in a way that reveals valuable insights. Here, Israeli entrepreneurs have an opportunity to blend the insider view of a given industry with an outsider perspective, allowing them to creatively analyze data until it tells an interesting story. In the U.S, hospital readmissions are formally recognized typically within 30 days from discharge. As Israelis who are familiar with the American Digital Health and insurance industries, we decided to challenge this assumption. Examining the actuarial data around hospital readmissions not only 30 days post-discharge but also within 90 days and a year has led to a striking conclusion: re-admissions cost self-insured employers $80 billion annually, of which 50% are preventable.
Deeply partner with VCs:
Many entrepreneurs prefer to minimize their “friction” with VC. This is an unfortunate mistake. Leveraging the resources, experience, and point of view of VCs can be a win-win situation: startups can benefit the VCs’ network, experience, and knowledge, and VCs can ensure they make wise investments.
Your business model matters!
A compelling solution to a worthy problem will struggle without an attractive business model. Ideally, the business model makes the buying decision a “no-brainer” value proposition to the customer. When designing our business model one of our VCs connected us with the health benefits leader of Walmart, the largest employer in the world! We gained a key insight into our business model right then and there. Thanks to this insight, we decided to offer a value-based solution allowing employers, health plans, and health systems to assure successful recovery.
It is natural for companies starting their journey to change course along the way. It is important to stay flexible, stay aware of the market, and continuously evolve. Understanding not only what you do, but also why you do it before starting a company will allow you to evolve and iterate better and faster.
Yoni Stein is the CEO and co-founder of Laguna Health.