How to Turn a Mobile Health Application into a Real Business

1/13/12Follow @SkipFleshman

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these sectors produce a lot of short-term money and the products and services are almost always fads. If you want to build a real company, then solve a real medical problem and start, from day one, with a plan that works alongside the payers, providers, and physicians. That is where long-term money is made.

Hardware is OK! Well, this is a shift away from the traditional venture paradigm. The fact is that hardware development, like software development, is much cheaper and less risky than it was even five years ago. China has become an inexpensive design, manufacturing, and assembly powerhouse and companies like PCH International are actively helping startups get their design and manufacturing right the first time. It’s still risky though…just ask Jawbone.

Forget selling to corporations. Many startup founders still believe that large corporations can be a great customer or channel for health and wellness products. The idea is that this will help keep employees healthy and reduce absenteeism and insurance premiums. Well, I still haven’t heard which specific organization at IBM, United Airlines, or P&G has budget to buy this stuff and I find it hard to believe the ROI will be quantifiable. I’d focus valuable sales assets elsewhere.

The use of GPS receivers, cameras and accelerometers in the mobile device and the development of new health-related product sensors will enable consumers to greatly improve their health and wellness over the next decade. Although this sector is still in its infancy, there will undoubtedly be large markets for products that are easy to use and show results. The signal-to-noise ratio, as with other mobile applications in the app-stores, will still be very low, but this is a sector that venture capitalists, health care providers, insurance companies and physicians should be paying much more attention to. Entrepreneurs already are.

Skip Fleshman is a Managing Partner at Asset Management Ventures, which has invested in Health 2.0 companies such as CardioDx, HealthTap, Lark, Proteus Biomedical, and Maverix. Follow @SkipFleshman

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  • Henway

    Great article and matches most of my own personal cynical views…

    Altho I wished you haven’t posted it. Now my competitive intuition may be gone =(

  • http://ducknetweb.blogspot.com MedicalQuack

    The entire issue here is that technology may be ready but at what cost to consumers? Any day I would choose a direct input to HeatlhVault PHR rather than rely on 3rd parties who collect and sell data for profit. I just happen to like privacy and think we should tax those big corporate conglomerates who make billions with “free taxpayer data” and a couple years ago I never I thought I would make a statement as such but it is what it is today.

    Certainly when you have big companies like Walgreens stating their data selling business is worth just under $800 million, who doesn’t stop and give this some thought? It’s not fair to have to adapt a healthier lifestyle to have to support corporate greed at the same time? I don’t think so and this leads only to more inequality and lack of transparency. Was it not Fitbit that dumped out via a Google search the sexual activities of some consumers that were naive enough to wear one during that time:)

    License and tax the big corporations for this use and give something back I say as we all become data chasers to fix flawed data that denies opportunities for many. Insurers are right up on this when you look at all their analytics and behavioral risk assessments and those who do not keep up on mergers and acquisitions may not have a clue here on how deep their analytics run, but they are there and they sell a ton of data too.

    http://ducknetweb.blogspot.com/2011/12/alternative-millionaires-taxlicense-and.html

  • civisisus

    so much problematic with this short piece it’s hard to know where to start, so let’s stay simple: employers pay for over half of health care in the US, but Skipper wants you to “forget selling to corporations” and yet to “…start, from day one, with a plan that works alongside the payers, providers, and physicians. That is where long-term money is made.”

    what Skip has told you here, alongside with the usual VC blather: “first, bring me the broomstick of the wicked witch of the west” – is that what he doesn’t know about the US healthcare marketplace would fill a book…shelf. if you believed what he’s written, it’s doubtful you’d invest much if anything in any of the firms his outfit is backing.

  • http://www.ageinplacetech.com Laurie Orlov

    Skip, your advice is good — but I am seeing companies come and go because of additional issues that they didn’t consider and that you didn’t cover. Although I was thinking about the tech market for boomers and seniors, the same advice applies to the even more nascent mobile health app market.

    http://www.ageinplacetech.com/blog/5-prerequisites-sustaining-good-business-idea

    Best regards,

    Laurie Orlov
    Founder, Aging in Place Technology Watch

  • http://www.publicis-healthware.de Aleksandar Stojanovic

    Very good analysis! Only thing missing from my perspective – pointing out the importance of a solid diffusion strategy. Getting money and building services and technology is not enough. Every new health 2.0 service and m-health app is facing a huge lack of visibility due to an overcrowded marketplace.

  • Dave Monahan

    Skip,

    Great article. Just 1 question – What markets would you target? Consumer? Any others?

    Thanks

    Dave