James Park co-founded and leads an activity tracking company Fitbit, inspired by Nintendo Wii. Frank Williams co-founded and heads up value-based care software business Evolent Health. When their companies went public, Park celebrated by having a Smash Burger delivered to the corporate jet on an IPO roadshow. Williams’ company had a couple of happy hours and served eggs and pancakes to employees as they watched the company’s debut on Wall Street.
Apart from each of them bringing their companies to the public market, their digital health companies have little in common. And yet they shared a stage together at the Rock Health Summit in San Francisco this week because hell, how many other digital health companies have done an IPO this year? Park and Williams make an odd couple of digital health. They capture both the attitude that wearables can change people’s lives and the long-range ambition that health IT companies play a critical role in healthcare reform.
The sales cycle in the healthcare industry is long and Evolent Health’s approach is to work with a group of committed healthcare partners (its contracts are eight years long) to help health systems shift from fee-for-service to outcomes-based care models and help them change the way they deliver healthcare. The sharp contrast with Fitbit’s direct-to-consumer model hardware company that’s grown into a profitable company was not lost on Williams. He confessed, “I have Fitbit envy at parties.”
It was an awkward pairing in many respects. Fitbit has been around since 2007 and Evolent Health recently celebrated its fourth birthday. One has a global, direct to consumer strategy and another is a business to business model focused squarely on the U.S. market. Evolent’s $100 million in revenues matches Fitbit’s research and development budget.
But Williams also used the platform as an opportunity to reinforce his vision for his business . “We didn’t start the company on a whim. We talked with 150 healthcare CEOs…We don’t have a crystal ball, but people get it and want to be part of [what we’re doing].” He also took pride in its revenue growth. “When you are able to get above $100m in four years that’s terrific.”
Whoever said turnover is vanity, profit is sanity, cash is reality probably wasn’t talking about the healthcare industry, I guess.
“We could have started smaller and delivered financial gains faster,” Williams added, “but the reward for going big five years out is well worth the investment opportunity,” Williams said. He added that he expects the company to break even by 2017.
A Deep-dive Into Specialty Pharma
A specialty drug is a class of prescription medications used to treat complex, chronic or rare medical conditions. Although this classification was originally intended to define the treatment of rare, also termed “orphan” diseases, affecting fewer than 200,000 people in the US, more recently, specialty drugs have emerged as the cornerstone of treatment for chronic and complex diseases such as cancer, autoimmune conditions, diabetes, hepatitis C, and HIV/AIDS.
One advantage Evolent Health has compared with Fitbit is that few companies are prepared to take on this kind of challenge on the scale that it has. Contrast that with Fitbit, where competitors are everywhere. It also gets criticized for having a high portion of users who stop using the wearable after six months or worse — get a rash.
The rash didn’t come up but the drop-out rate did. On the defensive, Park likened its track record to gym memberships or home fitness equipment. And people are still buying those products. But pushing social media more may help with stickiness. If friends could see your daily activity, that creates competitiveness and support.
Both companies also shared strong ratings on Glassdoor, which means they both have cultivated strong corporate cultures that has no doubt helped them build their businesses. As moderator Brook Byers, the cofounder and senior partner of Kleiner Perkins Caulfield and Byers suggested, that will serve them well as competing companies court their employees.
