I’m providing a bit of help for an Internet service startup in the medical space. Great little company with a lot of promise, but still working to hone its underlying business model. Following a meeting we had the other day, I promised to write-up some of my ideas, however, in a rather strange stream of consciousness, I started writing up one set of ideas and ended up talking about an entirely different set of ideas. Probably the most interesting of which was the fact that I discovered that the Company is in fact not in the communications business at all, but perhaps in the business of harvesting doctor time, where the harvestor machinery was actually the communications service itself. Read It.
Archive for November, 2001
I’m doing a bit of consulting right now for an Internet service startup which for purposes of this essay we’ll simply call, “the Company”. It’s a great group of people working on this project and its turning out to be a lot of fun.
They’re initial foray into the business of providing hosting services for facilitating patient-doctor communications was predicated upon a patient subscription model of roughly $12 per month for access to a secure website and messaging to the doctor with roughly a 12 to 24 hour turn-around in communication.
There are a ton of opportunities surrounding this Company, but slow patient signups over the past three months have led them to discuss various other possibilities for how to monetize the basics of facilitating better doctor-patient communication.
This essay and analysis turned out to be more of a stream-of-consciousness. I originally started out with one set of ideas and quickly, over the course of a few hours, ended up with entirely different set of ideas. So, without further ado, here is the analysis.
THE COMPANY is in the business of provided secure messaging services targeting the medical and health professions. It is anticipated that these solutions will become increasingly more sophisticated, placing the Company in the center of an increasingly complex web of communications processes between doctors, patients and those entities that interact with each of them such as diagnostic labs and pharmaceutical companies.
Key to the Company’s long-term success will be its ability to insert itself in the middle of today’s rather cumbersome communications processes (workflows), providing efficiencies through the automation of manual communications.
The immediate challenge facing the Company is how to create a simple, replicable, easy-to-communicate underlying business model that accommodates a sustainable, recurring revenue strategy and at the same time does not either slow or stymie growth and adoption of the Company’s services. It must therefore accommodate the needs and motivations of all its constituents.
This paper will put forth and suggest one potential route for the Company to discuss and consider.
Current Business Model
The current business model is predicated upon consumers paying a monthly subscription of roughly $12/month for access to the Company. Doctor’s are today sold on the concept that they will turn a cost into a revenue, while at the same time providing better service. The major problem facing this model at the moment has to do with the fact that many Doctor’s do not feel comfortable in ‘selling’ something that today they give for free. This is a larger problem than them just being ‘ill-trained’ to sell the product. The very ‘concept’ of selling is something they are pre-disposed not to do.
Secondly, only a small percentage of patients require convenient access to their doctor through secured Internet messaging, leaving the lion-share of the market untapped.
While sign-ups are occurring, they’re not occurring as fast as the Company would like, therefore suggesting that the Company re-evaluate its market approach and positioning.
Before going further, I thought I’d simply bullet list the major motivations surrounding the moving parts of this puzzle.
– Generally reluctant to pay any sort of subscription model.
– INNEVITABILITY – will use email or secure message to communicate with doctor
– Like the concept of extra revenue, but uncomfortable to tell patients to ‘sign-up’ at a fee
– Afraid that easier access to them might overwhelm them with messages.
– Generally like the concept of using the Internet to facilitate better communications.
– INNEVITABILITY – will use computer communications to communicate with other doctors, patients and constituents.
– Generally resistant and/or afraid of new systems, especially computer systems
– Have the ability to sabotage new ideas if they are not included or sold on the concept
– Must be trained
– INNEVITABILITY – the doctor’s office will be networked and ‘computerized’
– Spend a lot of money to reach doctors, spend even more money to reach consumers.
Lab Diagnostics Companies
– Want to provide better service to doctors with respect to how lab results are communicated.
When looking at the following motivations and inevitabilities, it is clear that the constituents have inefficiencies and or problems that the Company can solve. It is also a fairly safe assumption that everyone within the health field will, at some point in the future, utilize technology to facilitate and improve communications and processes. So fundamentally, the concept of ‘secured messaging and communications’ services to this field is sound and practical business to be in.
So here is when I begin the creative thinking.
What if the Company’s product is NOT a communications service after all? What if we change our thinking a little bit and consider that the Company’s product is really the doctor himself, and more specifically, the doctor’s “time”. So, what if the Company is in the business of producing “Doctor Time”. Time for patients, time for drug companies, time for labs etc. The reason I think this is an important ‘what if’ is that it occurred to me that an extension of the ‘supply-side’ theory and a culmination of all of the discussions surrounding who has money and who will pay seams to circle the doctor and grabbing a portion of the doctor’s mind-share.
So, what if we view the Company’s business as one of providing a hosted service specially designed to capture a portion of a doctor day… say, 1 to 2 hours per day. We know that a doctor’s time is valuable commodity to labs, drug companies and patients, but we might have been attempting to monetize the wrong part of the puzzle.
Think of the Company’s services as ‘harvesters’ of Doctor Time, a rare and precious commodity. We do this by providing the one thing that stands a chance of inching its way into the daily routine of an already business day in the life of a doctor, namely Internet communications with patients, labs, other doctors and drug companies. Think email, but highly optimized to streamline specifically for the vertical of doctor communication.
While this will take some time to fine tune, fundamentally, the ability to ‘frame’ or place a ‘window’ around “doctor time” can be monetized.
If you buy into the theory above, then the current business model which entails a subscription model for patients to ‘buy’ doctor time is not that far off, it just might not have been the right starting point, because there is a readily available supply of doctor-time provided by doctors through the phone. (we’ll discuss this later).
I do believe that it is inevitable that doctor time will migrate from phone to computer, if for nothing more than the computer is a more efficient means of communication, and more can be done in less time with less hassle.
Another metaphor to use here is the concept of a Trojan horse (our razor). If we can get the Company service (our Trojan horse) inserted into a doctor’s day, by facilitating the process of doctor communications, then we have in effect harvested our product, doctor time, at the expense of other forms of less efficient communication. Everyone wins in this model. We help doctors get more done with less work, in return, we have a framed window from which to communicate to doctor’s for 1 to 2 hours per day.
The key to long-term success will not only require that we harvest doctor time by inserting our more efficient Trojan horse, it will be to ensure that in doing so, we simultaneously make ourselves hard to get rid of or replace. Think of this as weaving a web around the doctor. The strength of the web we weave is directly proportional to the number and complexity of the communications or work-flow processes that the Company’s systems facilitates.
I’ve long since believed that the ultimate portal is the users communications ‘inbox’. Today, that is email. It’s the first thing you open when turn on the networked computer. If the Company can become the ‘secure messaging’ inbox of the doctor, doing that better than anyone else, and providing much more value than a generic email inbox, then the Company will have been successful in ensuring that ultimately, doctor time can be monetized. Even a quick analysis (perfect world) of doctor time would estimate it being worth roughly $4,000 per month per doctor. (20 hours times $200/hour).
So now the game becomes two-fold.
1. how can we ‘harvest’ our product (build supply) by inserting our Trojan horse into the doctor’s already busy schedule, eroding other less efficient forms of communication like the phone etc. and
2. what is the right starting point or right place to start looking to monetize doctor time.
The Problem of Patient Subscription
We already know that while ‘doctor-time’ has value to a patient, only a small percentage of patients will buy into a ‘subscription’ model. The reason for this, I believe, is that the perceived ‘value’ of guaranteed access to doctor time via the Internet, for most people, is bound to the perceived threat of not being able to reach the doctor when and only when a patient needs access to the Doctor, through any means of communication. Meaning, if I knew that I could NOT call my doctor, when I needed him, and the only way to reach him was by signing on to a subscription service BEFORE I got sick (like buying life insurance before you die), well then, I would sign up for the service. Therefore, in order for a ‘subscription’ model to work at any substantial level, the supply of free ‘doctor time’ must be shut off, doctors must stop providing doctor time for free on the phone. I don’t want to get into whether or not this will or will not happen. I understand that this has been tried and has failed many times. I just want to point out the facts.
Who Wants “Doctor Time” the Most?
In addition to patients, pharmaceutical companies, other doctors and lab companies all need and could benefit from better access to doctor time. However unlike patients, these entities are in the business of communicating with doctors, and therefore have money and a willingness to spend it to improve their efficiencies in consuming a portion of doctor time. Perhaps the most important attribute about this ‘back-office’ communication is that doctor time is NOT provided for free to any of these channels, unlike the way it is to patients via the phone. Therefore, it stands to reason that one or more of these companies might be the appropriate place to start looking to monetize doctor time.
The Communications Web
Let’s take a look at the concept of the ‘communications web’. The communications web is a strategy for ensuring that the Company achieves ‘lock-in’, a term mostly used in the computer software industry to describe the ‘stickiness’ of an application and its subsequent in-ability to be removed or replaced. The key to this strategy is to connect as many of the dots as possible. Creating a communications channel between A and B has one ‘sticky’ value. A connection between A, B and C has an even higher ‘sticky’ value. As the number and complexity of connections is increased, (no different than neurons on the brain), the overall ‘value’ of the network increases, and the ability for any one ‘node’ of the network to remove itself becomes increasingly difficult, thereby increasing “lock-in”.
Since harvesting our product requires doctors to change their behavior, I believe that we need to pull out all the stops with respect to our strategy to acquire doctors and harvest their time. Namely:
1. all costs need to be removed for doctor participation, or subsidized
2. the doctor needs to be rewarded for his use of the ‘internet channel’ versus any other channel of communication. Money is the clear reward.
Now, we already knew that, but we also know that we’re not going to be able to subsidize the doctor with revenues from the patient until the supply of free doctor time through the phone is shut off. So that only leaves the ‘back-office’ ties and connections to the doctor, of which, the Drug companies are the wealthiest and most willing to pay for a slice of doctor time.
Therefore, whether the money comes from Drug company investment in the Company, or whether we put together programs that allow the drug companies to subsidize the cost associated with producing doctor time, I think the answer lies in looking at who has the most to gain by increasing their mind-share to the doctor.
Ever seen Shrek or Final Fantasy? What great movies! The depth and clarity of these new movies are awesome! So, I was watching this Discover documentary a while back on Pixar and the ‘behind the scenes’ look at the amount of computer processing power required to render each frame of a CGI movie… impressive!
Now change gears. With all the talk lately surrounding ‘web services’, I’ve been spending a good deal of my own cycle time thinking about web services and what kinds of business models might emerge…
Now, switch gears again. Jabber’s been doing great work recently having to do with building a ‘framework for enabling dynamic web services’. Think of this as infrastructure to enable ‘dynamic web services’, or said another way, a framework for enabling web services to come and go as they please (computer on, web service available ‘present’ – computer off, web service unavailable or ‘not present’… get the picture?)
Well I was thinking, what kinds of applications in the ‘web services’ model really need to take advantage of a ‘dynamic’ state infrastructure and then I thought about distributed.net, a project to enable distributed computing. So I was thinking, there’s no more fundamental web service than the processing power of a networked computer.
Now, lets put all of these dispirit thoughts together… (yup, here come the “what ifs”)
WHAT IF all the idle CPU time connected to the Internet were connected to a “CPU Broker” (think electricity grids and electricity brokers or ENRON).
Now, what if that CPU Broker sold himself just like the old mainframe shops used to sell themselves… (Remember Cray computers?) by the cycle time of computing power…
Furthermore, what if companies like Pixar, struggling to get enough ‘cycle’ time on their own machines could outsource CGI rendering to a globally connected network of computers, and do all of this through this CPU Broker? Sound Interesting? Wait, there’s more…
So, let’s tie it all together. You have Jabber as the interstitial fluid which detects presence of a CPU, just the way it detects presence for instant messaging. It relays this information back to the CPU broker by saying… “Ok, I’m online, my keyboard and mouse have been inactive for over 15 minutes…, send me a job to crunch”. The CPU Broker then sends it a single frame of a CGI to render, and says, when your done, send the image back to me. Pixar pays CPU Broker $5 million to render billions of frames of ToyStory 3. CPU Broker then sends a check to User A, thanking him for allowing CPU Broker the use his computer while he was sleeping.
Well, you get the picture… now, if any of you out there do anything with this idea, you have to let me in on it, because… well, because I have MORE IDEAS WHERE THAT CAME FROM!
You ever have one of those days when you have too many ideas and get this panic attack like you’ll never have enough time to do them all? Well, I get them quite often, in fact, over the years, I’ve had to literally ‘turn-off’ the creative juices for fear that they would disrupt the discipline required to execute against the last set of ‘great ideas.’
The great thing about this Weblog is, I figure if I don’t have time to do it, perhaps I’ll just write it down and someone else will do it… Well, I don’t have enough time today to write all these up, so, for now, I’m just going to list, more for myself than anything else, the concepts which I’m going to write up in the next few days… so, here goes…
The Worlds CPU (Process) Broker
Exploring a concept to create a system capable of managing and brokering the worlds idle CPU cycle time. Think “electricity-grid brokering between states and energy companies… but applied to the million’s of computers connected to the Internet” This one is REALLY fascinating… I’ll likely get on this one tomrorow.
XML Forms + XML Router = NextGen Workflow
Notes, Groove, Groupwise. They all have it wrong. This essay will explore the foundations of a REAL GROUPWARE platform.
The Ultimate Communications Browser
I’ve often felt that the true power of any networked device is communication. We have a ‘universal content browser’, why don’t we have a ‘universal communications browser’. This essay will explore ideas for what it might look like and how it might be built.
Hop, Skip, Jump – Exploring Fluid Networks
I’ve been absolutely fascinated with the idea of combining the concepts of P2P, Bluethooth and SixDegrees. This essay will explore a new protocol infrastructure layer for enabling a world-wide communications network which is partially fixed and partially fluid (wireless).
Technologies Biggest Fallacy
Supposedly advancements in technology free our time to do the ‘things we really want.’ Hog-wash. Technology DOES make us more prodructive, but its a black hole… more to come…
I love open source. I love what it stands for and I love the fact that as a connected society we’ve perfected the concepts surrounding ‘division of labor’ to such a degree that we’re now afforded both the luxuries and opportunity to do what we want for the sheer enjoyment of it, even if that means coding into the wee hours of the night! I love business, I love creating them and working with people to run and fine-tune them. I especially love making money, whether it be for business, myself or others. Money has afforded me the freedom to pursue my other passions in life: travel, thinking, writing, creating and oh yea, partying! Most of all, I love it when I get to put all my loves together… all at the same time!
Must all mis amores live separate lives? Can’t they just get along? I think they can. I think they will. Find out how…
Perry Evans, former President of Webb and the founder of Mapquest first introduced me to the concepts of open source back in early 1999 when he and Chris Fanjoy came across the Jabber open source project while researching messaging technologies leveraging XML.
I must admit, for at least the first few months or so, I just didn’t get it. After all, who in their right mind would develop software in their free time for fun, and never expect a penny from their labor?
In order to fully grasp open source, its value and the culture behind it, one must either experience it firsthand or connect with an individual who has. For those of you who don’t have the time to do so, Eric Raymond’s essay’s are some of the best writings which summarize the historical view of open source and these works served as a foundation for my own understand and growth.
Since inception, it’s been Jabber, Inc.’s goal to redefine the acceptable parameters surrounding the commercial and open source ecosystem. An entrepreneur by genetics and a creator by passion, I set out to expand these boundaries, and internalize my own formulas and opinions surrounding the open-commercial intersection.
Having been a biology major in college, I quickly gravitated towards the principle of mutualism, which describes the harmoneous interaction of two organisms which benefit through their involvement with one another, furthering their own health, security or wellbeing.
In our particular case, I came to appreciate the advantages of open source in fostering awareness and accelerating what Craig Burton describes as ‘global ubiquity’, a requirement for any technology to withstand the tests of time as it competes for a seat at the roundtable of Internet infrastructure. I also quickly came to appreciate what some would describe as the ‘unruly’ and ‘unpredictable’ nature of open source evolution, which I welcomed as an attribute well suited to combat and undermine organized competition in unpredictable ways — kinda like guerilla warfare.
Likewise, I believe that Jeremie and others within the open source project came to realize the importance and advantages of having Jabber, Inc. fund development while simultaneously helping to promote awareness and attract additional developers and commercial entities in the process.
While still in the formative stages of development, Jabber, Inc. discussed the possibility of granting stock options to significant contributors of the open project, in a conscious desire to reward and accelerate community development, innovation and adoption. Unfortunately, our discussions were quickly quagmired in details surrounding the practicalities of how to retain both the reality and perception of fairness in the administration of such a plan.
While I don’t disagree with our decision to shelve option grants to open source contributors, opting instead to hire the major contributors, I do believe the decision was based upon several factors surrounding Jabber, Inc.’s particular situation at the time, factors which need not effect an ability for future commercial endeavors from taking advantage of the concept.
While there are always things that could have been done better, we all know it’s not a perfect world and we certainly didn’t have access to perfect information. I believe that in the case of Jabber, Inc., we’ve done our best to balance a difficult tightrope between our requirement to generate revenue and our desire to remain true to our heritage of mutualism which requires trust, mutual respect and a recognition that goals and objectives need not be mutually exclusive.
So we get to the meat of this rambling…
I believe the objectives of revenue maximization in the ‘next-generation’ commercial software company are not odds with open source methodology, principles or goals, but instead only an evolutionary step removed from a mutualistic relationship which will serve to accelerate them both without compromise.
In the never ending pursuit to perfect a replicable formula for success, I believe there exists a roadmap for commercial software companies to spawn open source projects from the onset and attract the same voluntary and self-selected contributions that exist in open source projects today, but with a system of monetary remuneration which is considered neither mercenary nor evil, but a required component of a well greased machine.
It’s this ideology that will dominate my thinking in future ventures. Think of it as Commercially OPEN for Business, and one helluva strategy to amass armies capable of changing the world! … or at very least, competing with Microsoft in one remote corner of it. 🙂
Just over three years ago now, prior to starting Jabber, Inc., I got a brainfart over a few shots of tequilla at a local bar called Sing Sing. I can’t recall now what the hell made me think of this, I think I was talking about Hotmail or something. Anyways, I came up with an idea to create a hard drive web service. Actually, at the time, ‘web services’ the way we think of them today was hardly a thought. The concept was simple, write a driver that loads in windows that spoofs your computer into thinking that you have a new drive, called N: Drive, which is in essance an unlimited sized Network Drive.
Well, to make a long story short, I kinda dragged my heals on the idea, and by the time I had finished a business plan and offering memorandum, X Drive went into beta, and their service was literally identical to what I had contemplated. Well, I scrapped the project and started Jabber, Inc.
Since then, I see that X Drive raised well over $70M in several rounds of financing and are now promoting X Drive as a central storage device for Windows XP, no doubt .Net integrated. It’s hard to tell how they’re doing, their private still, but they have an all-star lineup of investors and fundamentally, a centralized storage device/service in an increasingly networked world makes a lot of sense.
This morning I was cleaning out my old directories when I came across the rough draft of the business plan. I figured I might as well post it, if for nothing than posterity. If anyone ever does anything with this, just promise to give me a small cut of the action!
So, is it just me, or does it appear as if everyone is jobless right now? I guess being in the Internet sector focused on telcom doesn’t help things much. I think the two sectors are in competition right now to see which can free-fall farther. No really, I know so many extremely talented, hard working individuals who aren’t working right now it’s ridiculous. Don’t get me wrong, I’m all for resetting what was an unsustainable era of hype only outdone by the amount of foolish money which chased it, but really! I guess being a ‘people’ person by nature hasn’t helped me much professionally, especially in the corporate environment. I’m consistently prodded to be tougher and make more calculated (cold) decisions with respect to employees. Well, I guess I can’t much argue with the realities surrounding the numbness of business to personality, but I don’t have to like it. So I’m thinking this morning of starting a new organization called BOO for “Band Of Outcasts”. Not sure exactly what we’ll do yet, but I do know that if your looking for talent, it’s abounding right now. What a great time to start a company, it’s a good thing I’m an entrepreneur!
Don’t get me wrong, I’m all for resetting what was an unsustainable era of hype only outdone by the amount of foolish money which chased it, but really!
I guess being a ‘people’ person by nature hasn’t helped me much professionally, especially in the corporate environment. I’m consistently prodded to be tougher and make more calculated (cold) decisions with respect to employees. Well, I guess I can’t much argue with the realities surrounding the numbness of business to personality, but I don’t have to like it.
So I’m thinking this morning of starting a new organization called BOO for “Band Of Outcasts”. Not sure exactly what we’ll do yet, but I do know that if your looking for talent, it’s abounding right now. What a great time to start a company, it’s a good thing I’m an entrepreneur!
Dave Crocker, one of the Internet’s progenitors, suggests that network applications can be broadly distinguished by five operational characteristics:
- server push or client pull;
- synchronous (interactive) or asynchronous (batch);
- time-assured or time-insensitive;
- best-effort or reliable;
- stateful or stateless.