Startups

Is Driver a story of fast fail or a cautionary tale against pursuing DTC model?

Driver reportedly raised around $100 million and had top medical minds on its scientific advisory board, but the $3,000 price tag for its services that its cancer patients would have to pay appears to have been a flawed model to begin with.

shut down, startup crash

Driver, a startup based in San Francisco, launched in September with big name backers and a goal to use technology to transform the clinical trial recruitment and matching process for cancer patients.

Two months later, the company has skidded to a halt. It has laid off its employees and shut down. While fast failures are a way to try out innovations and not be daunted if they falter, Driver’s story raises questions about the direct-to-consumer business model that the company espoused.

Per news reports, Driver raised between $90 and $100 million in venture capital from the likes of Horizon Ventures, a fund affiliated with Li Ka-shing, a wealthy Hong Kong investor and philanthropist. But the money seems to have run out.

“One of the biggest things we got wrong is, we tried to do too much,” co-founder and CEO William Polkinghorn, said in a phone interview with MedCity News. The company not only collected tumor samples to be sequenced and patients’ medical records and then use tech to connect them to clinical trials, it also ran two pathology labs and ran apps for doctors and patients in both the U.S. and China.

The MedCity story from Monday goes on to say:

However, he emphasized the novelty of Driver’s business model, adding that there are two kinds of companies: those that create better solutions for existing problems, and those that attempt to create first-in-kind solutions. “I hope what came across was an ambitious, authentic, contrarian attempt to solve a problem that the best centers in the US have not solved.”

Kudos to Polkinghorn, a trained radiation oncologist, for talking to reporters after Driver failed — I wish we had more entrepreneurs sharing their stories as that is far more instructive than stories of successes necessarily — but there is a certain amount of naïveté in those comments too.

It brings me back to a recent conversation I had with venture capitalist Lisa Suennen who said one of the things that she finds galling about healthcare entrepreneurs is that many do not understand who is the ultimately party that pays in healthcare. Or think that they have invented the best thing since sliced bread and will be adopted en masse.

“They think, ‘Well, I am good and it’s so goddamn cool and my grandma needed it that I will change the world,” Suennen said in an interview in October. “And you say, “Well, who is going to pay for it?’ and they go, ‘Uh, everybody cause it’s so great.’ That drives me slightly insane.”

The business model was to charge cancer patients $3,000 to get their tumor sequenced and then match them to a clinical trial. Cancer patients  would also pay a monthly subscription of $20.

That’s quite astronomical.

Driver’s passion to help cancer patients get to the right treatment, and the size of the problem in clinical trial recruitment and matching may have led them to overestimate the ability or desire for patients to pay.

The STAT reporter who covered the initial launch was skeptical of the model in the story noting that the company “is trying to convince patients already burdened by the costs of their disease to pay for its service.”

On Monday, Polkinghorn acknowledged that the high price tag led to sign-ups in the single digits and “definitely played a role” in the low traction.

The bigger question should be who made the decision to go directly to cancer patients?  Did the company get the right advice from its partners such as the  U.S. National Cancer Institute and the Chinese National Cancer Center? How about from members of Driver’s board and its scientific advisory?

Hype about apps and digital health notwithstanding, anecdotally, I have come across more startups in the healthcare space that that have had to pivot from the business-to-consumer model to business-to-business model to survive than I have seen successful b-to-c stories. Most people in healthcare would agree that b-to-c is notoriously hard to pull off in healthcare. It’s not like wellness or beauty where a mixture of vanity and self-indulgence propels people to make purchases.

Feel free to shoot me down in the comments section and give me examples of healthcare startups that have succeeded using the b-to-c model. Helix is possibly one example but b-to-c is only one aspect of its business and the company is most definitely not pursuing chronic diseases patients exclusively.

But exceptions only prove the rule and unless healthcare gets a lot of more simplified, go forward in the b-to-c path at your own peril.

Photo: Andrew_Rybalko, Getty Images

 

 

 

 

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