In healthcare VC circles, if someone’s star has been rising lately it has been Lisa Suennen’s. The digital health and health IT investor has been featured in several healthcare media publications this year, most notably in Stat, so much so that some who knows her told her it’s annoying, she recalled with her signature belly laugh in a recent interview.
But just when you thought you had her pinned down — free-spirited VC who writes the Venture Valkyrie blog, indefatigable champion of women and diversity in the workplace, co-host of the Tech Tonics podcast who did a short stint in corporate VC with GE Ventures before leaving a few months ago — comes the news that she is reinventing herself, yet again.
On Monday, Manatt, Phelps & Phillips, a legal and professionals services firm announced that Suennen will soon lead its digital and technology businesses and the firm’s venture capital fund. She will be based in San Francisco.
While the size of the fund that Suennen will lead is small — it invests $2 million in seed money annually to companies and has 32 active portfolio companies — her take on healthcare and tech, and of entrepreneurship more broadly, is worth paying attention to.
So, out of the litany of mildly crazy to wildly outrageous things she has heard entrepreneurs say over the years, here are a few things that irk her:
Let’s go to market with a minimum viable product
As tech continues its foray into healthcare, this is one concept that entrepreneurs-who grew up in tech should quickly jettison if they want to succeed in healthcare. The idea is simple — what’s the least viable product that can be launched and sold to customers that can be improved over time? In other words it’s the product that can be shipped the fastest with the least perfection. Which if we are selling accounting software, seems reasonable, but perhaps not in an industry where patient safety is paramount.
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.
“I don’t think the model works very well in healthcare. You can’t have a heart stent that almost works,” she exclaimed in a recent interview in San Francisco before the Manatt announcement was made. “You can’t have a clinical algorithm that is ‘yeah it seems alright.’ It has to be clinically legitimate.”
The concept of minimum viable product may work in certain narrow applications of administrative tasks in healthcare, but Suennen hears the phrase far too often than she is comfortable with.
Medication adherence apps are mostly worthless
In 2012, a study found that the cost of medication nonadherence —patients not taking their drugs as recommended by their physician — is anywhere between $100 billion and $289 billion annually. So it is a problem that many companies are racing to solve. One new idea that has spawned countless startups as the digital health industry has matured is medication adherence apps.
Suennen is no fan.
“I think that medication management products have mostly proven to be worthless or nearly worthless,” she said noting that most people don’t wish to self-identify as sick and that’s one big reason they fail to take the meds as they are supposed to.
But the bigger problem may be that that such apps inherently assume that all patients need is a nudge, a reminder, to help them take their medications. But often the problems causing them to miss medications are far more acute than forgetfulness.
“People can’t afford these drugs. They don’t have insurance, they can’t get to the pharmacy, side effects bother them more than the drugs helping them. And it’s kind of a whole litany of reasons that have been identified over the years for why those medication adherence products don’t work well,” she said. “There’s a segment of people for whom the issue is reminding but it’s not apparently the key.”
We’ll go from $0 revenue to $100 million revenue in 5 years
This phrase drives Suennen nuts, is utterly divorced from reality and also shows complete lack of understanding of how the healthcare industry works.
“It’s almost like there is a standard chart that somebody has printed off the Internet that shows you going from 0 revenue to $100M revenue in 5 years. In what world? In healthcare services, healthcare IT, medical devices world, it almost never happens. You are lucky to get to $20M in five years.”
This attitude is also right up there with another bold, and ultimately silly, assertion that the app or software or product that entrepreneurs are building is so awesome, that people will fall over themselves in trying to buy it. The product is so revolutionary that it will prompt scores of consumer customers to sign up and that will keep the startup afloat as it builds an enterprise product.
Irksome as that attitude is, what’s even worse is entrepreneurs who have no clue about who actually pays for healthcare. Here, Suennen describes a typical encounter with founders who believe they have a cool product.
“They think ‘Well, I am good and it’s so goddamn cool and my grandma needed it that I will change the world.’ And you say “Well, who is going to pay for it?’ and they go ‘Uh, everybody cause it’s so great.’ That really drives me really slightly insane. I often have people coming to me and saying ‘Consumers will pay for blah-di-blah’ thing and … in healthcare that’s almost never true unless it’s wellness and people may pay for exercise-related things or they may pay for beauty but they very rarely pay for healthcare things.”‘
Starting on January 7, Suennen will be able to direct what she wants to pay for with a hope getting good returns for Manatt. But perhaps more interestingly for her, she will get a chance to take a broader view of how digital technologies will ultimately transform a myriad of industries, not just health.
And that, for sure, will be anything but irksome.
