Sunday, July 23, 2017

The Rise of Social Media and Adoption by Medical Students

The rise of social media is changing marketing strategy. United Airlines is the most recent example of the dangers of ignoring the role of social media. They paid dearly regarding market value until they quelled a social media-based firestorm trashing its brand and (potentially) altering purchase decisions.1

In its early days of social media, evidence of the marketing value was unclear. Early proponents claimed vast potential to reach the customer, but many unknowns clouded its potential, especially concerns regarding impact, and the challenge of measuring impact. Such concerns are in the past. With an audience of 180 million (56% of the population) in the US in 2015, and expected growth to over 200 million (>60%) in 2020.2 The digital marketer cannot ignore the potential value of engaging the target market using social media.

The reach across a broad demographic is large, about 50% of social media users are older than 35 years old. Use of social media is highest for users 18-24 years old (>90%) and still high for users <17 years old (84%).2 Activity increasingly occurs using a smartphone. Of the 180 million users, 88% use a smartphone. Smartphone based use is expected to continue to grow to the detriment of desktop viewing2 thus favoring smaller screens and location specific content. To obtain the attention of the potential consumer, the digital marketer must investigate social media and assume users access social media using their smartphone.

Earlier concerns acknowledged the reach of social media however some doubted if social marketing would succeed commercially and justify the high valuations. It is possible that a herd effect may have driven initial spending on social media and spending was not necessarily reflective of actual value. But, metrics to measure marketing goal achievement and ROI of social media involvement have evolved, and revenue for social media has shown a steady increase of dollars spent. Facebook accounts for most revenue; it alone has seen revenue from $12B in 2014 to $27B in 2016. By comparison, in 2016 Linked received $3B and Twitter $2.5B.3

Usage is another metric to assess social media platforms and their impact. In the US in 2016 monthly users were as follows: Facebook (149M), Instagram [owned by Facebook] (75M), Snapchat and Pinterest (51M) and Twitter (47M). YouTube had 116M visitors; however, it should be considered more of a passive video delivery medium rather than a pure social network since although there is a discussion component most activity is not social in nature. All the others fall far behind.4

Impact regarding social media is also a function of the number of users times average time spent. From that perspective, Facebook excels and dwarfs its competition with 50 minutes per user per day in June of 2016.5

Facebook excels at both time spent per user and number of users; thus their dominance is even greater than one might predict based on the number of users6(p10). A social networking strategy that ignores social media other than Facebook is indeed justifiable; one that ignores Facebook is not.

Social Media and Medical Students

Medical student use of social media is quite high, measured at over 90% in 20117 and has almost certainly grown since then. Initial concerns of medical educators focused on the dangers associated with a medical student using social media to divulge patient information.8 The expressed fear was that usage of social media, such as Facebook, would evidence weakened professionalism9. A demonstration of lack of harm caused by social media involvement calmed such doubts; however, evidence at that point concluded that no educational benefits existed.10 Instead, educators highlighted the need to educate students about the proper use of social media regarding patient care11; In general, the attitude toward the value of social media moved slowly toward cautious optimism.12 Despite the negative association of social media by some faculty, enthusiasm and interest in social media by medical students remained high.13

More recently there is a desire to remove the negative association of social media with unprofessional behavior and embrace its ability to enhance communication.14 Social media improves communication capability and successfully enhanced research communication and interest.8 Additional articles outline the value of Facebook for anatomy education16 and stress management.17 Despite the earlier rejection of social media, the medical training establishment appears to be embracing its potential value.

Medical education does not intend to get in the way of medical students using social media and may, in fact, support it. Engaging medical students via social media is a viable strategy. The community building potential and peer support offered by social media counter the challenge and stress of medical school. The social media community also enhances communication between students and medical experts. Given high percentage penetration of social media use, educators and those higher up in the academic hierarchy likely use it as well.

References

  1. Police drag a man from a United Airlines plane. The Economist.

  2. eMarketer. US Social StatPack: Usage and Ad Spending. May 2016.

  3. Social media: revenue of selected companies 2016 | Statistic. Statista.

  4. The 2016 U.S. Mobile App Report. ComScore Inc.

  5. Stewart James B. Facebook Has 50 Minutes of Your Time Each Day. It Wants More.. The New York Times. https://www.nytimes.com/2016/05/06/business/facebook-bends-the-rules-of-audience-engagement-to-its-advantage.html. Published May 5, 2016. Accessed April 13, 2017.

  6. Activate Tech and Media Outlook 2017.Technology at October 25, 2016.

  7. Bosslet Gabriel T, Torke Alexia M, Hickman Susan E, Terry Colin L, Helft Paul R. The Patient–Doctor Relationship and Online Social Networks: Results of a National Survey. J Gen Intern Med. October 1, 2011;26(10):1168-1174. doi:10.1007/s11606-011-1761-2.

  8. Foley Niamh M, Maher Bridget M, Corrigan Mark A. Social Media and Tomorrow’s Medical Students--How Do They Fit?. J Surg Educ. June 2014;71(3):385-390. doi:10.1016/j.jsurg.2013.10.008.

  9. Osman Ahmed, Wardle Andrew, Caesar Richard. Online Professionalism and Facebook--Falling through the Generation Gap. Med Teach. 2012;34(8):e549-556. doi:10.3109/0142159X.2012.668624.

  10. Cartledge Peter, Miller Michael, Phillips Bob. The Use of Social-Networking Sites in Medical Education. Med Teach. October 2013;35(10):847-857. doi:10.3109/0142159X.2013.804909.

  11. Pander Tanja, Pinilla Severin, Dimitriadis Konstantinos, Fischer Martin R. The Use of Facebook in Medical Education--a Literature Review. GMS Z Med Ausbild. 2014;31(3):Doc33. doi:10.3205/zma000925.

  12. Popoiu Marius Calin, Grosseck Gabriela, Holotescu Carmen. What do We Know about the Use of Social Media in Medical Education?. Procedia - Soc Behav Sci. January 1, 2012;46:2262-2266. doi:10.1016/j.sbspro.2012.05.466.

  13. El Bialy Safaa, Jalali Alireza. Go Where the Students Are: A Comparison of the Use of Social Networking Sites Between Medical Students and Medical Educators. JMIR Med Educ. September 8, 2015;1(2). doi:10.2196/mededu.4908.

  14. Hennessy CM. Lifting the Negative Cloud of Social Media Use Within Medical Education. PubMed J. February 2017.

  15. Al-Khateeb Abdulrahman A, Abdurabu Hanan Y. Using Social Media to Facilitate Medical Students’ Interest in Research. Med Educ Online. 2014;19:25860.

  16. Exploring the Use of a Facebook Page in Anatomy Education. PubMed J.

  17. Facebook Stress Management Group for Year 1 Medical Students. PubMed J.

Saturday, June 24, 2017

Choosing an E-commerce Platform

So you have decided that you want to sell a product online. What next?

Building an Online Presence: First of all, get an understanding of the challenges and risks ahead of you. Get a clear vision of what it means to engage in e-commerce before you jump into the task of setting up a new website. In the decision to establish a site, keep in mind that this is a business. You are not creating a blog or a personal expression. Your goal is to make money selling products online. So put aside the need to create a lovely website or to provide pithy information.; those components are only relevant in as far as they help you sell products.

Storing the Product for Delivery: How will you manage the product after assembly? Your product must be available in sufficient quantity that users can receive it quickly. And you must have a means by which it can be stored and is still ready to be shipped promptly. How are you going to do that?

Gathering Customer Attention: Next comes the challenge of customers finding you and your marketing of the product to gather attention and enthusiasm. How will you stand out among the thousands of e-commerce websites already out there? Is your product so unique that it will engender a high-profit margin? Is it a commodity which will succeed based mostly on price? Also, consider if you want to offer special pricing to entice users to purchase your product such as a sale in July or a discount for first customers. Thus, how much control do you want to have over the marketing aspect of your product?

After the Sale: Once a customer has decided to buy your product you need to be informed of their purchase and engage a rapid and consistent system of shipping that product out to the customer reliably and efficiently. In a global market, users could be anywhere and potentially speak any language. You need to decide how far and wide you're going to ship and what methods you were going to use to ship the products.

When the Sale Sours: Unfortunately, the story does not always end there. Many times the product is seen as defective on the part of the customer, or there are shipping errors. These mistakes can lead to negative impressions of your product which harm sales in the future. How will you handle a request for returns and refund? Do you have a window upon which you will accept returns and outside of which you will reject them? Payments too can become problematic. The buyer can refuse the credit card payment. Depending on the credit cards you accept, you may have little or no recourse but to refund customers.

Happy Customers: Once you have established a relationship with a client, you may want to engage them in a system of longer-term retention to enable repeat sales or sales of similar products. You need to decide how integrated that system will be and time intensive for you to maintain. Similarly, will you somehow reward purchases and enable users to receive a discount for additional products? How will you get them to write a review or expressing interest in your products?

Choosing an E-commerce Platform: There are essentially three choices for an e-commerce platform.
  1. First, you can go it alone. That means you control the servers, the domains, the security certificates, and the payment system such as PayPal. 
  2. The second option would be to engage one of the many shopping platforms such Shopify. Shopify competes in a complicated Market. There are other shopping platforms which you would want to consider such as Bigcommerce Magento yo Kart and Big Cartel.
  3. The last option is the gorilla in the room, and that is Amazon. For the novice to e-commerce, Amazon has an incredibly complete help system with video and audio which explain components of the process step by step. 
Going it Alone: The above issues make it clear that creating your e-commerce website from scratch is unlikely to be a good choice and likely to be a source of risk and headaches. Few sellers choose this route anymore, and you should probably discard it.

e-commerce Platforms besides Amazon: Shopify is an example of a very easy e-commerce platform to engage. It will address most of your needs. But it doesn't necessarily have all the features you are looking for

Although the e-commerce platforms are popular, anyone who has purchased on Amazon understands its market power and influence. Unless there is a compelling reason to choose an e-commerce platform, Amazon should be your first choice to introduce your product to the market and engender sales. If sales disappoint or you feel that better returns could be obtained, then you can certainly engage a marketing platform to supplement Amazon or potentially to replace it. But as you start to investigate the value of e-commerce for your product Amazon and it's support for your growing operation, Amazon is a powerful and easy place to start.

Amazon
Amazon constrains your site to the Amazon interface and approach. If you feel that a unique selling strategy is important or essential to your product's sales, then the look and feel of the Amazon experience may not work for your product. On Amazon, you will find many unique and different products. Those companies have likely assumed that the marketing power and sales potential of Amazon outweigh possible benefits of a custom-designed website regarding sales or the expense of effort required.

Amazon comes in two flavors to the seller one in which you continue to manage warehousing and fulfillment and mainly use their structure for marketing, customer acquisition, and customer relationship management. Amazon brings s together many of the pieces involved in e-commerce and has established standards at a higher level than large shopping platforms.

Amazon FBA
Amazon is interested in your forming an even closer relationship by engaging in their fulfillment by Amazon (FBA) program. FBA removes almost all of the challenges of e-commerce in exchange for your paying Amazon for this service. FBA is provided in two sections, one for the individual and one for the business depending on the number of sales. If the number of sales is beyond 40 items per month, then the business strategy is the optimal choice.

Why Amazon FBA
Amazon FBA offers a solution to almost all e-commerce questions and concerns. It handles warehousing, fast shipping, returns, payment systems, and product reviews. It also has tools to get an overview of your product, assess sales, and identify areas where you can improve the performance of your sales operation. You essentially lose control and gain freedom.

Amazon's goal is to get you to utilize Amazon FBA to sell your product, and they have developed a system that will accomplish this aim. Further Amazon is always endeavoring to expand its market and better serve its customers. As seen by Amazon's next day delivery and same day delivery, they will continue to push the boundaries of e-commerce and to delight customers by addressing their desire for a clean, seamless, and quick purchasing experience. So keep in mind that this is a field of rapid change. For your product will you gain from such rapid change or be harmed by an inability to keep up with the field of e-commerce? FBA is a bet that Amazon will stay on top of e-commerce. That assumption hasn't been proven wrong yet.

Friday, June 23, 2017

That's All Folks. Selling a Life Science Venture

It's never too early to start to plan for selling the company. In fact, before you start you need to visualize how this venture will end. After all, this is the outcome your angels and Venture capitalists are waiting for. And they will have strong opinions about when you should sell.

When that time comes, you may be delighted that your company will be sold. However, you should consider the ramifications to your career. You may have invested most of your career in obtaining expertise in a single life science area. After you sell what rights will you have to participate in this field? Will you continue to be able to expand your knowledge? Will you be able to utilize your expertise? These are essential components of any sales agreement, and it is important that you are comfortable with the outcome.

Regarding the actual sale of the company typically there are multiple options for obtaining value from the company post funding cycles; however, for life science company there are typically very few options. Almost certainly you will seek a strategic sale to a pharmaceutical company. The capitalization requirements and complexity of marketing a novel pharmaceutical or device most rule out an IPO. And without that expertise obtaining revenue to entice a walking harvest (ongoing payment based on sales) or partial sale are unlikely. Nor is a financial sale to non-life science company likely.

Further, few purchasers can obtain the full value of your vision, and the potential buyers will be short. On the other hand, large life science corporations are counting on companies such as yours to identify new opportunities, so if the trials go well, you have a valuable product to sell. Of course, there is a chance that trials go poorly and the value of company plummets. Be prepared for the reality that the end result of your venture is Chapter 7, full dissolution of all assets. Not a pretty outcome but highlight likely in a life science venture.

To prepare for eventually selling your company, your goal is to find angels and more importantly venture capitalists with expertise in this domain since no doubt skills required to sell a company are far outside your skill set. Look to investors to obtain expertise and negotiate a favorable sale of the company. Regarding the value obtained keep in mind that timing, a sale is not an exact science. You are going to feel like you either waited too long to sell or have sold too early. You are not seeking the perfect solution but of solution which meets your financial and developmental needs and goals. Good luck with your planning and good luck with your future venture.

The Startup Process: Sourcing - Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Reference: David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.

Thursday, June 22, 2017

Getting Support for Your Life Science Startup

As a life scientist-entrepreneur, you are well aware of the value of mentors. In the process of education and early training, a life scientist engages with the number of mentors who provide support from the emotional to coaching to specific skills development.

In the life of the company, there are similarly multiple areas that require ongoing support. For example:
  • determining a valuation of the enterprise,
  • developing a marketing strategy,
  • determining when to seek out guidance and from experts such as accountants and lawyers.
At crucial points in career development, scientists receive key input. One framework when evaluating the need for entrepreneurial support is to consider the concept of a value event. In scientific training, one can imagine such an event would be an advisor who recommended classes to take as an undergraduate or a Ph.D. program or MD program which would meet professional and personal needs. In career development of the life scientist, a large number of individuals have guided the life scientist regarding scientific research at various key points. In fact, the decision to pursue an entrepreneurial path is such an event.

The concept of a value event applies equally well to the life scientist embarking on a business career. In business, there are similar milestones including:
  • determination of a need for additional funding and the amount of funding to request,
  • the timing of various funding rounds and the type of investor to seek, 
  • reassessment of team members and the need to alter or enhance the team to meet business goals. 
Life scientists additionally have value events related to the production of a pharmaceutical or device. These are clearly marked through various stages of clinical trials. The success or failure at these stages will dramatically affect the potential value of the startup venture. It is essential that the investor also understands the implications of such value events. A medical product with negative impact or no demonstrated value cannot ethically be sold. Investors must realize that one cannot market such products even if it is in high demand.

In the life sciences because of the need for vast capital and marketing expertise, a startup venture will rarely succeed as an independent body. Identify individuals who can assist with the most important event to investors, the sale of the company when the proper time comes. No doubt, the investors will be very interested in participating at this point; however, the entrepreneur must look out for both personal and business interest since the sale of the company may require ongoing effort as an employee or removal from the enterprise altogether. These are dramatic changes that will impact the scientific career of the life scientist-entrepreneur. Picking up a new biomedical path is not the same of as creating a new piece of software.

The Startup ProcessSourcing - Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Reference: David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.

Negotiation of Startup Funding

For the budding life science entrepreneur, you want to establish an agreement with the investor that works in the long term. Negotiation of an agreement cannot be avoided, but need not be onerous. As discussed earlier in Structuring An Early Round Investment, there are several different structure strategies which can be deployed. The actual structure depends on the results of the negotiation. Similarly, Valuing Your Life Science Startup is a component of the negotiation.

Negotiation is not uniquely different for the life scientist in a business framework versus in any other aspect of life. Components to consider include:

Power differential. Who has the power?
  • Are you desperate for money and can't proceed without the investor? 
  • Are you unable to run the company without input from the investor? 
  • Are you hoping that the investor will help you establish a qualified board? 
  • Or recommend key team members. 
Alternatively, is everything in place and your project is so compelling that you need little from the investor some cash?

Personality.

  • Are you an introvert who does not enjoy playing games with other people and who repels from any aspect of manipulation. In this case, be upfront and tell the investor that the deal is the deal and you're not interested in wasting a lot of time going back and forth. Highlight to the investor that this deal is not capricious but has been well thought-out, and it is fair in your mind and is a win-win solution for both parties.
  • If you are more extroverted and enjoy the experience of working with a car salesman to purchase the car at the lowest price, then you have an entirely different strategy. In a sense, you find the negotiation to be the fun part and will feel cheated if you don't get the best deal. Understand that if your investor is also of a similar bent, this will be a long protracted experience which potentially both of you will enjoy. It could also turn really nasty. If the investor is more introverted, you may have just lost that investor as a partner.
We all want to win. With the exception of the above car salesman analogy, almost every negotiation is best done with the assumption that both parties win. Funding a startup is not a zero-sum game.
You need adequate monetary support, guidance, autonomy, and motivation in the form of company ownership to successfully launch your business. Your investor needs a certain return on investment, risk profile, and a sense that your startup will add value according to their belief system. In your negotiation, make it clear that you want the investor and you to both win.  A good investor will understand a win-win scenario. An investor who disagrees should be told to look elsewhere.

Be aware of triangles. Negotiation is almost impossible if it involves more than two people. With every additional person, you increase the number of pairs of negotiation several fold. With three people there are three times as many negotiation requirements. That includes the entrepreneur negotiating with two investors, and the two investors negotiating between themselves. This makes the process substantially more complicated and should be avoided at all costs. You can easily calculate the danger of having four members in the negotiation. Get the investors to agree to have a lead and accept their terms. And only negotiate with the lead. If a non-lead won't buy into that, dump them before you waste a lot of time.

Final advice. Negotiation is not something new to you. You have been negotiating for things your entire life and have strategies that work and strategies that do not work. As opposed to the earlier topics, this is familiar territory. Do not change how you negotiate at this critical moment of your life. Choose a strategy that works for you, has a high comfort level and typically achieves the outcomes you want. If you hate buying from car salespeople, now is not the time to decide you want to become a high-pressure negotiator.

The Startup ProcessSourcing - Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Reference: David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.

Sunday, June 18, 2017

Seeing is Not Believing

Gaming holds great promise. It produces autonomy, empowerment, social connectedness, intrinsic motivation, challenge, flow, feedback, achievement, and more. The best games take over reality and immerse the player in an exciting and challenging world. And the best tool to engage the gamer in an immersive experience is headset-based virtual reality (VR). In virtual reality, one can be anywhere, and one can alter all the elements. So why hasn't VR taken off?

One aspect of gaming is rarely discussed: watching vs. playing. Why is it important to be in the game vs. following along? Do you have to be in the game to see its value? This issue is especially interesting for me since I am not a gamer and have never really been all that fond of playing games.

A user can see the value of a VR to the player in an instant. But that doesn't seem to translate to enthusiasm for VR in general. How do we convince folks to purchase a VR game if they have never used VR? I've tried using stories and 2D images and lengthy verbal explanations and failed every time. I did my best to create the dream, but it still wasn't good enough. Perhaps some rare folks can imagine a VR experience, but most cannot. In most cases, only those who have used Oculus/Vive/Playstation VR can understand the immersive value of VR. But it doesn't take long.

So to help people see the value of VR game based education we need them to do more than watch. We need to get them to experience VR, vs. being on the outside. We need an experience that puts them inside to the exclusion of everything else. Once there, folks will demand that this is how they give and get training from here on out.

What does this mean for applying VR to medical education? Medical school could deploy a gaming framework. Until faculty of medicine and educators in the classroom experience VR, a VR solution is unlikely to gain wide acceptance. But once stakeholders "get inside the game," VR for training purposes will expand rapidly. Game developers like me who want to create games for medical education need to be ready for that fateful day. And hopefully this holiday season will be the holiday when everyone receives a VR setup.

Friday, June 16, 2017

Structuring An Early Round Investment

The actual structure created for a life science startup will not be substantially different from any other startup investment. Thus the following information is not specifically customized to the needs of the life scientist-entrepreneur.

Structuring an early stage investment can be seen from two perspectives. The first perspective focuses on the complexity of the structure. In general, this requires a simple yet understandable agreement and an agreement which is based on trust and mutual respect of both parties. The Simplicity of the agreement is important because in most cases funding from the angel will not be the last funding. For both the founder and the investor it is important that the structure created at the outset is acceptable to venture capitalist in later rounds without significant modification.

The secondary component is the actual agreement terms. Structure includes more than ownership stake however since that component is often the most important the most contentious is it make sense to address it first.

The primary decision is between offering the investor of common shares and various rights that would likely accompany the common shares versus some type of preferred shares as well as the many possible rights that would be conferred alongside preferred shares.

Arguments for either can be made but basically, common shares will not confer many of the special rights available to preferred shares yet will be simpler arrange. For a small stake in a company common shares made be the easiest and most logical path to follow. The potential upside can be added through additional rights to invest in additional rounds as well as to sell when anyone else sells shares.

Preferred shares may provide additional rights related to board selection, obtaining dividends, obtaining internal information, making decisions regarding liquidation, or conversion or redemption of shares.

The final type of investment would be a convertible note which is more attractive currently. This avoids actual negotiation on the price and sets the share offering tied to a future event. The note is likely to be convertible into preferred stock and discounted to the rate of the actual sale of preferred stock as compensation for the additional risk that the angel endured. The advantage is that neither party must agree on a valuation at this time. At a later time, the financials will be more clear and the VC will likely be more skilled at valuation. The convertible note provides an incentive to gather additional funds via venture capital had a later time, and because of changes in the discount rate, the incentive is to obtain those funds earlier rather than later. Thus if additional funding is not expected this is not a logical path to follow.

The note includes the possibility that the investor would be repaid if additional funding is not received. However, in such a case it's more likely that the company is not viable and all the funds would have been lost. If additional funds are not received then the angel has likely taken on a large risk and received a fairly meager rate of return on the note. Again in such a situation a not is the optimal structure.

Additional important parts of the structure beyond the capital structure discussed above would be the expected involvement of the investor regarding participation in the board, or acting an advisor. The structure should also include the expected time that the entrepreneur will be involved as well as the salary and expected time the entrepreneur will stay with the company. Finally reporting as with any contract is essential and should offer financial information for the company as on a monthly and quarterly basis as well as significant expenses.

The entrepreneur should consider that a request for preferred shares will require a more complicated legal agreement to clarify the details and the investor rights. This also increases the time for the negotiation as well as the legal costs involved. However to avoid confusion and disagreements later it's logical to invest wisely regarding time and energy and ensure that the agreement is both sound and clear to both parties.

The Startup ProcessSourcing - Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Reference: David Amis-Howard Stevenson (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.

Sunday, June 11, 2017

Valuing Your Life Science Startup

Angels investing in your life science startup will want figures for the value of the startup at the beginning as well as at a future time to calculate their expected return. Angels obviously do not expect that all investments will succeed. Thus they will want to know that your future value represents a significant multiple of the present value or a high internal rate of return.

In comparison to other startups, a life science product will likely require approval by multiple regulatory bodies Complicated and expensive empirical clinical studies will be required to achieve a minimal value product worthy of acquisition. The value will be measured not on regarding clinical benefits or diagnostic utility, but also cost-savings.

A life science startup likely has some previous work upon with to demonstrate clinical or diagnostic utility. The high failure rate due to regulatory approval and the need for successful clinical trials will hinder enthusiasm for the startup.

Calculating the future value, of course, is partially a guess. The business plan will provide proforma estimates of future sales, reasonable expenses, and potential earnings based on the product, market size, market penetration and competitive price. Your business plan's financials; however, are not the sole guide to valuation. The figures should provide some guidance, but investors understand that these numbers are not something upon which they can rely. In the life sciences (and elsewhere) a discounted cash flow valuation is recommended (Jarju-Jeanty, 2014). A discussion of the process is outlined in that paper.

Potentially, such figures have little to do with the value placed on your life science startup. The initial valuation may be the starting point. Of course, the initial valuation is inexact; for an early start up because there likely is no product or even a minimal value product upon which to judge value.

For this reason, some investors apply a dollar value to assets and ideas. For example, they may see an energetic, thoughtful, and motivated entrepreneur as providing $1M worth of value. A sound idea for a value proposition, a high-quality management team, and a well-qualified board may also be worth a million dollars. Having a prototype or potential drug will add value. However, this again would be based on conjecture as at this time the prototype or compound does not have a specific or guaranteed revenue generation capability. Together all of these elements will be a means by which an angel investor will determine the value of a company. This strategy is referred to as the Berkus method. A more complicated but similar approach includes more variables alongside weights and percent contribution but the effect is the same, rubric based on existing data rather than figures (Kauffman, 2007, p16). There are even online tools for a quick and easy estimate.

There are other strategies to value a company at its outset. Some will have a ceiling which they will not go beyond such as $5M. Others will assume that founders and management have two-thirds of the value and the investor is contributing 1/3.

Others will value the firm at the beginning based on what they expect the future value will be and then adjust that value for their expected multiplier. An investor seeking a multiplier of ten times the money they put in the startup will be interested in investing in a million dollars if they believe that the value of their investment three years later would be worth ten million dollars.

Other investors seek an internal rate of return. For example, if they expect to gain a 30% return each year and the investment is over three years they will expect that the initial investment will grow 30% each year and will yield the value that they perceive the company will have at a future time, say three years. Thus if they assume the company will be worth $10M they calculate that the current value must be $4.5M to achieve an IRR of 30% over a three year period.

References:
  1. Hogue Joseph. Investing in the Next Big Thing: How to Invest in Startups and Equity Crowdfunding like an Angel Investor. January 28, 2017.
  2. Harju-Jeanty Robert. Venture capital valuation of small life science companies. Spring 2014.
  3. Amis David, Stevenson Howard. Winning Angels: The 7 Fundamentals of Early Stage Investing. Vol 1 edition. London: FT Press. March 15, 2001.
  4. Rossiter Matthew S, Kramer Barry J, April 11 Michael J Patrick •, 2013. Life Science Financing Survey 2012
  5. Styhre Alexander. Valuing and Investing in Life Science Companies. In: Financing Life Science Innovation. Vol Palgrave Macmillan UK; 2015:107-136. doi:10.1057/9781137392480_5.
  6. Allen Kathleen R. Launching New Ventures: An Entrepreneurial Approach. Vol 7 edition. Boston, MA: South-Western College Pub. January 16, 2015.
  7. Ewing Marion Kauffman Foundation. Valuing Pre-revenue Companies. In: Kauffman eVenturing : The Entrepreneur’s Trusted Guide to High Growth. Vol Kauffman eVenturing. ; 2007.
  8. Stevenson David Amis-Howard (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.
The Startup ProcessSourcing - Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Monday, May 29, 2017

Angels Evaluating Your Life Science Venture

From the last blog, you figured out how to get the attention of Angels (or a group of Angels) for your life science venture. The next goal is to receive a favorable evaluation.

An Angel group noted that 86% don't get the chance to make a pitch [Clark Paul, Banks Charlie, Dunbar Matt, Lackey Mac. Perfecting Your Pitch: VentureSouth’s 101 Tips for Pitching to Angel Investors. April 23, 2017]. VC funding is worse probably. Per How does deal flow apply to VC firms?, only 30 of 650 scanned executive summaries will make it to the stage where the VC samples the financials and management; that's 4.6%. You have your work cut out if you want your life science venture to get funded. Keep in mind that there are many funding sources, so the numbers aren't as bleak as that figure would imply.

So how do you increase your chances of funding from a specific Angel?

At the early stage, Angels are looking for evidence of 
  1. a value proposition for a life science problem,
  2. validity regarding potential clinical impact, and 
  3. use of appropriate technology in the implementation 
(see Soenksen Luis R, Yazdi Youseph. Stage-gate process for life sciences and medical innovation investmentTechnovationdoi:10.1016/j.technovation.2017.03.003.). Those criteria are probably not a surprise to you.

Is this a hot topic?: Since the focus is the life sciences, consider how hot your topic is. Medicine is not neutral in its attention to a disease. And what is "hot" is not based on scientific fact (e.g., years of life lost, incidence, lifelong prevalence, cost to treat, etc.). If "impact" determined funding then almost all funding would go to prevention and basic science breakthroughs. In comparison, NCI receives more than any other institute at the NIH, over $2B. Cancer wins the prize probably because it is scary. If you want to get funded the topic must be one that an Angel sees as critical. Thankfully Bill Gates has shown light on health issues of 3rd world countries; hopefully, such neglected topics will soon be seen as worthy of investment.

So what is hot right now? Orphan diseases? Biologics? Related to the opioid or obesity epidemic? Zika virus? May sure, your topic is hot. And that you highlight how your topic is hot. And of course, hot topics come and go. Yesterday's "bioterrorism" issue is cold until it becomes hot again when evidence of the use of a biological weapon is demonstrated.

Next consideration is the team, but since we are talking life science, the team has to be more than a competent bunch of folks who can launch a business. You need to have a team that also has mastery over the topic and the competition that is also addressing that problem. If FDA approval is required, in addition to lawyers you need folks skilled in that labyrinthine process. But don't go too crazy with details, it is possible that your venture will be purchased early in the process (per Evaluating Life Science Companies for Investment, 9/6/2016). It is unlikely that an Angel has no life science expertise; don't fudge.

It's about health - and honesty: Outline the upside in both the financial return on investment AND the impact on health; the Angel wants you to achieve positive health outcomes. Finally, the problems of Theranos are fresh on everyone's mind. Be scrupulous in your development and presentation of the product. Any hint of deception and your venture will be in the 86% that go nowhere.

Where will more money come from?: Finally, an Angel understands how complicated a life science venture can be and you will most likely need additional funding. The Angel needs to know that you intend to eventually access additional funding [Styhre Alexander. Valuing and Investing in Life Science Companies. In: Financing Life Science Innovation. Vol Palgrave Macmillan UK; 2015:107-136. doi:10.1057/9781137392480_5.]

Hopefully, with the above, your new venture is on its way to a successful evaluation.

The Startup Process: Sourcing - Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Reference: Stevenson David Amis-Howard (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.

Saturday, May 27, 2017

Angel Funding - Going to the Source

For the next set of blogs, I am going to take on a very different topic.

What if your passion is not to practice medicine but start up a company that can impact health outcomes?
What if what you want to do is to do research and then turn that research into life science business that sells pharmaceuticals and medical devices?

What if you want to launch a health startup with health focus? The possible ways of improving health by altering other components of our health care system are endless. With the rise of precision medicine, there are a plethora of opportunities to provide value through new technology and implementations of technological solutions. [Precision medicine ideas for VCs and angel investorsVentureBeat. October 11, 2015.]
If so, this set of 7 blogs is for you. The blogs specifically focus on early stage angel funding for the life scientist or health-oriented entrepreneur and include the following topics:
  1. Sourcing: Put your investment opportunity in a place where angels can find it.
  2. Evaluating: Providing an opportunity that appeals to angel investors
  3. Valuing: Describing the value you will provide to the angel.
  4. Structuring: Organizing an offer that appeals to the investor
  5. Negotiating: Working together to finalize an agreement that meets everyone's needs
  6. Supporting: Gaining value from the angel beyond funding
  7. Harvesting: Providing ROI to the angel.
Sourcing Groups

The first priority is to make sure an angel can find you. Investors seek opportunity so you need to put your opportunity out there. Options include:

A Local Angel Group. The main reason is the comfort level of angels for a nearby venture. For a venture that is location-dependent or dependent on some unique aspect of the local community, this is a perfect match. For a life scientist, this is unlikely to be the case. So the main value is convenient access to the angel as an adviser post-funding and the likelihood that they are more comfortable (and thus more likely to fund) someone close to them geographically.

AngelList Syndicates and Internet Focused Angel Groups. Such angel groups take advantage of the Internet to establish and foster longer-distance relationships and are more logical for an Internet-based business. The point of contact will want to be involved but they probably won't be local. If your product startup is Internet-focused, they are likely to have more comfort with and expertise in products targeting Internet-based solutions and that use the Internet for digital marketing.

Typical means to find single source angel funding. Examples include a convenient family, friend, business associate, accountant, or lawyer. These are still an option so classic face to face networking and promoting you in smaller groups and via Internet presence (e.g., LinkedIn, Facebook) may yield results. But as with most other aspects of society, the value of the Internet and the search engine are quickly eroding this means to find funding for your health-oriented venture.

Health and Medical Focused Angels
The Internet can also direct you more quickly to an individual angel or angel group with a specific focus on the life sciences aware of your venture. Not only are they more interested in what you propose but they most certainly have the connections to grow your company and advice most relevant to your business opportunity. Examples include:
  • Individual Medical Devices Angel Investors via AngelList - Links to individual investors although AngelList has other investment opportunities for more passive investors. How to Pitch Your Venture
  • AngelMD - Building relationships that spur investment in the companies, innovations, and people charting the future of healthcare. There is no cost to be listed on the AngelMD network. [FAQ]
  • Angel Investment Network - Our investors look at all stages of business and across all sectors from genuine start-ups to more established businesses. We currently have 140,130 private investors, family funds, and venture capital funds. [Note: The search engine for investors can easily identify health or medical opportunities. Cost to Expose Venture]
  • Life Sciences Angel Network - To help our portfolio companies succeed we need to provide them with funding but also with operational support and an access to a broad network of healthcare investors, key opinion leaders, corporate players and other entrepreneurs
  • Life Science Angels - Life Science Angels is sponsored by several premier service organizations. Many offer our membership special services tailored to the life science industries and emerging and startup companies. [Application process requires in-person presentation]
  • Mass Medical Angels (MA2) - A seed stage investor group exclusively focused on life science and healthcare investments. [Though I must admit that the website does not inspire confidence that this is a very Internet savvy group.]
If you are excited about a health or medical venture, proceed with the next blogs (coming soon) and get ready to upload your plan and hit the (Internet) road with your ideas.

The Startup Process: Sourcing Evaluating - Valuing - Structuring - Negotiating - Supporting - Harvesting

Reference: Stevenson David Amis-Howard (2001). Winning angels: the seven fundamentals of early-stage investing. Pearson Education.

Thursday, April 27, 2017

Display Ads Related to Health

The Lets Get Physical billboard ad by Miami Dade County highlights two overweight women who are active together to the target market of older women. The apparent value proposition is that if you are active you will be happier and more engaged. It engages the user via women who clearly are well connected and happy. The ads call to action is  exercise 30 minutes per day or visit the website and is expected to "make health happen" for the respondent. I feel the objective in terms of hits to the website was measurable and attainable. Actually getting folks to excercise 30 minutes per day is not measurable and is unlikely to be effected.


The Gastric Sleeve billboard ad by Jackson Health highlights an overweight women who has a neutral expression (e.g, she doesn't look miserable) to the target market of younger women. The apparent value proposition is that if you surgery and you are overweight/obese you will get healthy. It engages the user via bright colors including her blouse and a green faded background and a perky blue color. The ads call to action is to visit the website to learn more thus "can help". I feel the objective in terms of hits to the website was measurable and attainable. I don't know that driving down the highway is the most opportune time to get someone to remember and hit a website however. So although attainable I doubt it will be all that effective


The Butts Are Gross ad from an anti-smoking billboard campaign in Illinois highlights a pretty ugly cigarette butt alongside the rear end of animals to the target market of young children [due to the the childish nature of the ad and the text]. The apparent value proposition is that if you don't smoke you won't look gross (and thus if you do you will). It engages the user via huge text, atypical images of animals and a big ugly cigarette butt. The ads implied call to action is don't smoke. I feel the objective is both not measurable except via focus groups (and even then would have a lot of biases). Nor do I feel it is attainable since it is really just a variation on "don't do it" and I don't know that children pay a lot of attention to billboards.



PETA's Save the Whales billboard ad highlights an overweight cartoon of woman on the beach to the target market of folks who eat too much, especially meat (given the "Go Vegetarian" text). The apparent value proposition is that if you change your diet to vegetarian you won't be fat. It engages the user via huge text, a clearly overweight female image, a common theme that generates compassion ("Save the Whales") and a play on the use of  the word "whale" which in this case refers to overweight women. It also uses the word blubber, also typically associated with whales to make the obesity seem disgusting. The ads call to action is to eat vegetarian (in keeping with PETA's core value). I feel the objective is both not measurable except via focus groups. More importantly shaming as a strategy to get people to lose weight, much less change their diet specifically to a vegetarian one has no evidence of success and more importantly defies logic. If anything this will generate PR for PETA because it is so insensitive; in a sense that is probably their goal and really has nothing to do with obesity or actually becoming vegetarian. Most likely the goal is to generate PR that leads to donations from folks who support PETA when the audience expresses disgust with the ad. My guess is even that ploy will fail as being mean to people and demeaning them is rarely a successful strategy.



The Health Watchers billboard ad highlights attractive food to an audience of hungry people. The apparent value proposition is that if you eat their food you will be more healthy. It engages the user via green text and images and a atypical sandwich type meal with healthy looking ingredients. It offs a nice contrast to typical fast food images. The ads call to action is eat their food and/or call a tiny number at the bottom. I feel the objective of eating their would be difficult to measure unless this is the only campaign or offer running at the same time (which seems unlikely). Measuring phone calls would be easier since that phone number could specifically to used for just this ad. Depending on the competition the outcome could be attainable. For example if most other food choices were unhealthy then this would stand out.

Monday, April 10, 2017

Magazine Ads related to Heath

As a followup I thought it would be helpful to look at how pharma and pro-health organizations used print ads to market as well as pro-heath ad not from pharma. Some might argue that print is dead, especially among young people/millennials, but the demographic of pill takers is older folks.

I am going to start with Zoloft since they get credit for one of the best ad campaigns ever. Here is what they did with print. The ad uses the format of a cartoon to highlight anti-depression features of the product to a target market of depressed mothers of young children ("mommy..."). The apparent value proposition is it can turn you from being "no fun" to being able to have fun again. We also are told that it has helped millions of people with depression. It engages the user via a cute cartoon (in keeping the cute bubble theme) with dialog between cute bubble as mom and cute bubble as doctor. There are other bubbles for the grocery check out person and the dad. The emotional response is one of teary eyed "isn't that wonderful, this brings the family together" sentiment. The ad's call to action is to follow her lead and 1) decide to get help, 2) go to the web and learn about zoloft, 3) ask a doctor about it, 4) take it. That is expected to yield depression relief benefit to the respondent. I feel the objective was measurable in terms of increased prescriptions and potentially attainable. I say potentially because is it harder to appeal to emotion with text only and the static bubbles are not nearly as cute without movement or voice over. It is worth noting that the text that describes the side effects and high risk of suicide in children is harder to read than the the cartoon text.

Charak Pharma highlights laxative features of the natural laxative product to a target market of someone with constipation. The apparent value proposition is that it will enable a bowel movement, It engages the user via a clear and somewhat crass [yet quite funny] message "why take s___ from anyone when you can make your own?" The ad's call to action is to take the pill relieve constipation and is expected to yield relief to the respondent. I feel the objective would be relatively hard to measure precisely since this product is "natural" and thus not by prescription. However I think it would work. The ad is unique and different. Most of us know the constipation ad with the lady who looks uncomfortable. But other than that treatments for constipation are not well known.

The ad from the Canadian Cancer Society highlights cancer causing features of tobacco product to a target market of young people who might be drawn into the use of flavoring (in this case tangerine).
The apparent value proposition is you can avoid cancer if you avoid flavored tobacco. It engages the user via a weird color spotch over a picture of the liver. The ad's call to action is to avoid flavored tobacco but how, when or where is not specified. It is not clear if the desired impact is to have people never start or to quit if they already started. I doubt it had much impact since young folks don't worry too much about cancer (and statistically it isn't a risk in their near future). And the splotch over the liver doesn't convey "don't do this" to me. I doubt it will decrease cancer much less get folks to quit or not start.

The Lipitor ad highlights lowering cholesterol features of the product to a target market of healthy adults (the woman is pretty, young and swimming). The apparent value proposition is that this drug can lower your cholesterol. It engages the user via a big question "Are you kidding yourself" and a healthy looking and active young woman; the intent is to instill doubt. The ads call to action is to talk to your doctor about risk (of heart disease?) and about Lipitor and is expected to yield benefit to the respondent in the form of a lower cholesterol level. Measuring prescriptions should be possible. I personally don't find the woman's challenge to be all that effective. There are multiple answer: 1) yes, and that's my choice to kid myself or 2) no, I know the risks and don't care

The ad from the Lung Cancer foundation highlights how cigarettes kill yourself or other people to a target market of smokers, other smokers, or people who are effected by and can influence smokers.
The apparent value proposition is that if you cut out cigarettes you decrease the lethal effects of smoking. It engages the user via a simple message with emotionally charged single words (suicide and homicide). The ad's call to action isn't stated but is clearly to stop smoking or stop someone from smoking both for them and for yourself to keep them and you from dying prematurely. I feel the objective would be hard to measure since quit attempts aren't public and long term impact is difficult to measure. The goal of getting someone to quit smoking is attainable but mostly by the motivated or by people willing to listened to the pleas of others. Unfortunately that population has already quit. Those left smoking are likely to not be in that category.

Thursday, April 6, 2017

Newsprint Ads Related to Health

About the only people who still read newspapers are the elderly so it is not a surprise that ads in newspapers almost exclusively focus on topics of interest to the elderly. Here is a review of some ads in newspapers

Thew NY State Nurses Association ad  highlights the health support features of Medicaid to a target market of elderly. The apparent value proposition is that if changes to Medicaid are resisted these benefits will remain; if not they will go away. It engages the user via a small healthy child and teddy bear and text based please to support the needs of children, the elderly and the disabled. The ads call to action is probably related to voting or contacting a politician since both are done frequently by the elderly or to check out a website and is expected to yield the benefit of no change to health services for the respondent. I believe the ad targets the elderly because almost all Medicaid funds primarily help the elderly with home care and nursing home costs. I feel the objective was not really measurable nor attainable. Highlighting value to children of the poor and the disabled ads emotional appeal but these are not large voting blocks and ignore the more clear value of Medicaid to the elderly, support for them when they become ill or infirm.

The Generation Solutions newspaper ad highlights ability of the home health care service to help the elderly with improving "gait speed" to a target market of professional caregivers and primary care providers. The apparent value proposition is that the services will confer a lower risk of mortality to the patients of the market by addressing gait limitations. It engages the user via a frail looking elderly woman (whose life will not end prematurely) and non-emotional data/results related to a study. The ads call to action is to contact the agency and is expected to yield the benefit to the respondent that a patient's gait speed is improved. I feel the objective was measurable in terms of increased calls although not especially attainable unless this ad was in a newspaper only seen by health care providers (which is possible). It would be more effective as an ad targeting family caregivers which had less data and said "talk to your loved one's physician about gait - it could help her recover and avoid a repeat fall".

The Carolina Select Home Care newspaper ad highlights the quality of their agency to a target market of the elderly with a physical condition and certified nurse assistants. The apparent value proposition is the elderly will receive high quality care and the nurse assistant will work in a better facility. It engages the user via a picture of a healthy and smiling older person with the assumption that their service achieves such an outcome. The ads call to action is to call a phone number and is expected to yield the benefit of learning about an environment that is good for the elderly person or a nice place to work. I feel the objective was measurable by following call rates after placement of the ad and quite attainable. The one limitation is the ad has two targets. It seems more logical to run two different ads with a more clear focus and see which one is more effective.

The Renew Home Healthcare newspaper ad highlights the comfort and zero cost of their agency to a target market of the elderly with a physical condition. The apparent value proposition is the elderly person will receive more comfort and achieve higher independence if they use their services. It engages the user via a picture tidy home and friendly young home health care person, further supporting an emotion of calm and ease. The ads call to action is to call a phone number and is expected to yield the benefit of learning about an environment that will promote their healthy return to independence . I feel the objective was measurable by following call rates after placement of the ad and quite attainable. The ad has a simple message and focuses on the fact that making a choice will not incur costs.

The Overactive Bladder research study newspaper ad highlights the problems of an overactive bladder and by implication implies that by participating in the study the elderly enrollee will potentially gain access to a medication that might help. The apparent value proposition is potential relief from the effects of an overactive bladder (incontinence). It engages the user via a woman who looks troubled and a smiling man. The ads call to action is to call a phone number and is expected to yield no cost for treatment and possible compensation. I feel the objective was easily measurable by phone call records and probably attainable. Since there is a change the person gets a placebo I feel it would be helpful to highlight how participation could help others by learning something new. Also I would expect that some compensation would be received by all participants. If so that should be a clear benefit of participating in the study.

Sunday, April 2, 2017

Television DTC Ads from Pharma

I agree with the AMA's proposed Ban on DTC Ads of Prescription Drugs and Medical Devices. To me the logic of the ban is that the only other country in the world that allows direct-to-consumer drug ads is New Zealand. My goal in this blog is not to repeat the various pros and cons cited for DTC ads [per Ventola C Lee. Direct-to-Consumer Pharmaceutical Advertising. P T. 2011;36(10):669-684.] Although, for the record my interpretation is that the cons far outweigh any perceived pros.

But my goal here is to shed light on how these ads work and what makes DTC pharma ads effective advertising. I selected what are considered the best DTC pharma ads per Rand Marketing (Mar 27, 2016).

Zoloft - https://www.youtube.com/watch?v=twhvtzd6gXA
The ad highlights the feature of the product to correct a chemical imbalance in the brain that leads to depression in the target market of individuals with sadness. The apparent value proposition is the ability to relieve sadness. It engages the user via "cuteness" that is taking a fairly depressing (sorry) topic and making it seem kid like and cute - and potentially beatable. The ad's call to action is primarily to talk to one's doctor about Zoloft (not depression). They also highlight an ad in a magazine (Shape) and a phone number to call. Taking this action is expected to yield benefit to the viewer in terms of relieving depression.

The ad is highlighted as one of the most effective DTC ads ever. I feel the objective was measurable since data related to prescriptions is readily available and the company could measure changes in prescriptions in the markets where the ad was shown. I also feel the effect of ad was quite attainable at the time it was aired. It provided a clear call to action and doctors were likely to follow up by prescribing the drug that the patient requested. At the time there were only 2 SSRIs, and sertraline (Zoloft) had a better profile than fluoxetine (Prozac). Plus depression as a medical condition was relatively unknown yet had been introduced already by the success of fluoxetine (Prozac).

AstraZeneca- https://www.youtube.com/watch?v=mNeB-Fw1-4g&feature=youtu.be
The ad highlights a brand that cares about healthy eating to a target market of people who eat sugar and unhealthy food. The apparent value proposition is that this company can give you advice on how to lower triglycerides and eat more healthy food. It engages the user via pictures of appetizing food (bacon sizzling), people gorging on food, and most importantly humor via 2 talking fish. The ad does not have an explicit call to action. The only benefit is one is now aware that a drug company cares about health eating and when the listener runs across marketing by the company they may see it in a more positive light vs. a manipulative ploy to highlight their drug (which relates to diabetes).

I think he ad is really funny, and the objective of putting a positive spin on the the company's brand should be easy to attain and measure via surveys and activity on social media (something they highlight in the ad).

Lipitor- https://www.youtube.com/watch?v=cHuKjBcwb7U&feature=youtu.be
The ad highlights the ability of the product to lower cholesterol to the target market of people with measured high cholesterol or are worried that they may have high cholesterol. The apparent value proposition is that it will decrease heart disease (although the ad only mentions data that shows value in folks with existing heart disease the ad implies value for anyone with high cholesterol). It engages the viewer via a healthy nature scene, someone rowing, and calm peaceful music to instill a sense of calm and vitality. The ads call to action is "ask your doctor if Lipitor is right for you", visit the website or check out the ad in a magazine. That action is expected to yield a prescription and secondary benefit of lower cholesterol and decreased risk of heart disease.

I feel the objective was measurable because prescribing habits are obtainable on a pharmacy level.  The outcome was also attainable because people are always anxious about heart disease and cancer and cholesterol is familiar and simple number that they can understand in terms of risk (a fact that is very much in dispute).

Rozerem- https://www.youtube.com/watch?v=VTiTAURabbA&feature=youtu.be
The ad highlights the ability of the drug to help you sleep better to a target market of folks with occasional insomnia (pretty much everyone). The apparent value proposition is this drug can help the person sleep but is not addictive and can be taken when needed. It engages the user via compassion for the person who can't sleep [he looks awful], humor with honest Abe Lincoln and an animal chatting. The ad's call to action is to "talk to your doctor" but doesn't mention the specific drug to request and is expected to yield improved sleep to the viewer who receives the prescription.

I feel the objective was measurable because prescribing habits are obtainable on a pharmacy level. The outcome (increased prescribing) was also attainable mostly because at that time most other sleep aids had been labeled as dangerous so the product was unique in the marketplace. This is perhaps why they don't mention the specific drug to ask for.

Vytorin- https://www.youtube.com/watch?v=V_Szhp-jvqE&feature=youtu.be
The ad highlights the cholesterol lowering feature of the product to a target market of individuals with high cholesterol. The apparent value proposition is this drug will be more effective at lowering cholesterol than competive product because it lowers absorption of cholesterol and production of cholesterol. It engages the viewer by presenting picture of attractive food and people with funny poses and expressions. The ads call to action is "ask your doctor about adding Vytorin" and they also provide a phone number to call. Such action is expected to yield the benefit of lower cholesterol to the viewer.

I feel the objective was measurable because prescribing habits are obtainable on a pharmacy level. The outcome was also attainable because cholesterol is perceived as a marker of health danger, so the public sees lowering cholesterol as a worthwhile goal in of itself.

Overall the ads use a variety of techniques and in general a fairly simple "talk to your doctor" call to action. They focus on areas of challenge or frustration and offer a simple and targeted solution. When a drug is mentioned the possible downside is read by the voice-over but not visually displayed; thus fostering the image that this is would be a simple solution to their problem.

Tuesday, March 28, 2017

Aural-only Messaging (Radio) and Health Care

Getting the message out on a health care topic when all you have is sound/voice is a challenge. But the success of radio, podcasts, auditory books would argue that there must be value. Beyond convenience (being able to listen when you are in a car or running/exercising) there are clear benefits of constraint that force the messenger to be focused. Thus, it's a great place to start if the goal is to understand how to be effective in conveying a health care message. To start, here are some of the best radio ads and let's look at the excellent work of others who have tracked down such ads and reviewed them (my comments on their blogs follow each)
In my search for health care related messaging that only use sound, branding seems to be most common purpose. I'd like to say "here are some great ads related to health" but mostly I found bad ones. Almost all would benefit from a better understanding of the value of narrative and storytelling. They are often prescriptive and focus too much on telling the listener what to think.

I found many like the Marion Health Care ad which promotes their health care training to potential enrollees. The emotional goal was to make me feel that this is a great place to get training. The call to action is to apply today and they provide a URL The goal is the listener will recognize that this organization provides better training and thus starts a path toward better health care training. I would describe the ad as the usual voice over "we're good" ad which is mostly meaningless other than to repeat the name of the advertiser over and over so that you recognize the name. But other than that there doesn't seem to be much purpose. I don't see it as very effective.

typical political ad [with added text via youtube for clarity] targets voters who are likely conservative/Republican without angering any elderly voter. It has no narrative, no story. The emotional appeal is to target my dislike of big government and draw me toward someone who will get rid of government (healthcare) yet retain medicare [presumably to keep older people happy]. A typical authoritative voice attempts to convince me this name is attached to something useful. Not very easy to understand, enjoyable or entertaining. There is no call to action beyond the implicit, vote for me. But perhaps this is an "informational" ad and thus the author cannot say "vote for me." If the listener has similar values than the potential value of taking action (e.g., voting for him) would be having a smaller government yet keeping Medicare intact.

An 45 second radio ad for Viagra targeting men with impotence includes mostly music lyrics and then a tag line at the end to explain why you are listening to that music. The music is quite emotional and expresses frustration and a sense of loss. The use of music seems innovative until you realize that this is radio. How many people start listening because they think it is song and then get the advertisement which directly connects with the song (versus there being a pause)? The content of the voiceover at the end isn't especially innovative. It ends with "this is the age to take action." Presumably, the action is to talk to your doctor about getting viagra but the ad doesn't say that. One would infer the goal of any action and proposed value is to address the erectile dysfunction problem highlighted in the music.

Hospital promotion such as the Rhode Island Hospital radio ad [version 1] targets people searching for a hospital or health care system. The goal is make me feel that this hospital is state of the art and will take excellent care of me. This version mostly says people come to our hospital for help, we have great resources. Apparently those great resources are the value they provide. It goes on with the theme that we are great with little evidence or emotional impact. There is no call to action. It seems unlikely to get someone to choose this hospital over another since I would assume any hospital would say the same thing.

Rhode Island Hospital radio ad [version 2] also targets people searching for a hospital or health care system. It starts out with a story "People here are enjoying their coffee" and then continues to explain that one person in their system is working hard to promote health for a patient. It's a story, but doesn't really evoke any emotion except for calm inspired by the quiet peaceful music in the background. What is strange is that thinking about a patient somehow translates to "what we have here is amazing" I don't see how the two go together. There is no call to action. It seems unlikely to get someone to choose this hospital over another since I would assume any hospital would say the same thing; though I do think the story makes it more unique and interesting.

And yet another hospital ad for Children's Hospital Los Angeles clearly targets parents. The ad says that the hospital is great and is rated high and has children in a day care center singing ABCD. The call to action is to visit their website... 

Stop the video after the radio ad and see if you agree on the first problem... That reviewer highlights the fact that people paint a picture from an ad and that picture is what they remember. It's a nice way to think about how ads influence us. 

I do think the emotional connection (children singing) is unrelated to an emotional connection to the hospital [making a kid well again presumably]. The specific value provided by this children's hospital vs. another is apparently related to their high ranking. It seems strange to use the singing voices while also highlighting value demonstrated by data (e.g., a higher ranking). It is also unclear why the action is to visit a website; why would you visit a website if your child was sick? Apparently they are building their brand so that when I do need a hospital I think of them.

Health messages delivered via radio as seen with the Idaho Department of Health & Welfare are probably more amenable to stories as in this one. Here a teen is providing thanks for someone referring her to a teen health promotion program aimed at latino teens. The target market is broader and is anyone who might refer a latino teen.. The ad continues to explain the program. The call to action is to call a number or visit a website. Both go by pretty quickly. I doubt folks would remember them without the ability to pause. The value is better health and decision making by latino teens. The reason for pursuing it is related to the thank you from a teen highlighted in the beginning story of the ad.

Sunday, March 26, 2017

Getting the Message Out On a Health Care Topic

It's important to get your message out to people. That message can be to
  1. announce a new drug/device, 
  2. promote a health care service, 
  3. reinforce the value of an existing brand or 
  4. change behaviors toward more healthy alternatives. 
In the next few blogs I'm going to look at the challenge of messaging as related to health care. The blogs will be divided by traditional media outlets. For each I have divided them into the term I will use in the blogs and in parenthesis "what they used to be called".
  1. aural-only messaging (radio)
  2. video (television)
  3. news summary (newsprint)
  4. articles (magazines)
  5. pass-by experiences (outdoor advertising) 
A discussion of digital marketing strategy in healthcare will grow from this analysis. So wait for that; it's coming later.

It helps to first start with a clear and concise guide to what makes a good strategy. The Effie Awards provide the following advice from the Jury deciding the best in advertising:
  • Build a clear, simple narrative.
  • Be concise
  • Storytelling is important
  • Make it easy, enjoyable and entertaining
It sounds easy but over the next few blogs we'll see how it is rare to find efforts that combine these elements.

Sunday, March 5, 2017

A Ray of Hope for Change

Last week we concluded that basically nothing supports destructive innovation in medical education. Factors that inhibit destruction include:
  1. the incessant growth, easy access to money, and confidence that the good times will continue, 
  2. lack of competition, 
  3. comfortable and stable labor market, and 
  4. tight regulation. These factors ensure that “normal science” lives on.
But barriers to entry also inhibit creative destruction. Perhaps Uber/Lyft, Google, and Apple succeeded not because of easy access to money and fear of a downturn, or an unstable labor market and lose regulation. Maybe the key was that the old paradigm was so much less competitive. Anyone who has used Uber/Lyft clearly sees advantage over taxis. Similarly Google bested prior search [and found a way to make money via adWords] and Apple has continued to take good ideas (the GUI created by Xerox Parc) and make them great and vastly better than the competition. All of these companies were free to enter a novel market.

Here at last we have some hope. We are indeed creating new medical schools. And if you look closely they are also trying out new ideas.

So where do we look for creative destruction? New medical schools.

And what should we do? Back off on demands to “standardize” them and ensure they “conform.” Let them innovate. Let them fail. Let them compete for students. Let the employees worry that they may lose their jobs.

If left alone perhaps they will accomplish the creative destruction that medical school education needs to accomplish a paradigm shift.

Tuesday, February 28, 2017

How Else can Innovation Come to Stagnant Markets?

We’ve been discussing creative destruction theories and come to the conclusion that no matter what theory you use, there is not the proper condition for a paradigm shift in medical education. For those of us who feel that a paradigm shift in the process of medical education would be a good thing, this is indeed bad news. It means that creative destruction can’t and won’t happen. The “Normal Science” of medical education will continue unabated and unchallenged until a recession in the health care market takes place. And if the latter theory is true, destruction will only occur on the upswing AFTER the downturn. And ONLY if the recession is so bad that it instills fear that another will come. It sounds hopeless.

Perhaps other factors that enable creative destruction can take hold, say, competition. Think digital cameras from Canon and Nikon vs. the old film based ones from Kodak (which by the way had digital technology that it chose not to use). Competition pushed creative destruction. Medical schools sadly don’t compete with each other. No hope there. Strike 1.

How about unstable labor markets? A stable labor market discourages creative destruction as people stay with what they have and few are incentivized to become entrepreneurs. Although there has been some upheaval in term of PhDs at medical schools most jobs are pretty secure. That security translates again to less anxiety and less interest in and support for creative destruction. Another dead end. Strike 2.

Excess regulation inhibits creative destruction. Examples include cities that are trying to halt AirBNB and Uber with laws that were written 50 years ago, or laws that require Tesla to use dealerships. Medical education is so controlled by government regulations (OSHA, HIPAA, access rules) and systematized by non-governmental organizations that it is indeed highly regulated. Can it be that the original paradigm shift that started with the Flexner Report is now part of the problem? That is, in seeking “consistency” and “quality” we created a system that highlights banality, caution, and a lack of innovation? We thus squelched creative destruction in the process just as is seen in markets with excessive government regulation. Is the solution then to loosen standards and dissolve organizational bodies so that schools (like states in the US) can be incubators or novel ideas? Since institutions come but rarely go, this seems rather unlikely. Strike 3.


The depressing conclusion (for folks who want change to happen) is that the “creative destruction” model is stymied from action because of: 1) lack of a downturn [2 weeks ago blog], 2) lack of a fear of a downturn because of incessant growth and easy access to money [last week’s blog], and 3), no competition, a comfortable and stable labor market, and tight regulation [this week’s blog].

It makes sense. But it’s depressing nonetheless that the environment for creative destruction and subsequent paradigm shift in medical education is extremely poor.