New INC Magazine Blog Post by Howard Tullman

Big Tech's Healthcare Headache

The same abysmal customer service that works for selling toasters or books is not going to fly when it comes to delivering medicine and medical care. Actual patients demand actual people to take care of them.

By Howard Tullman

General managing partner, G2T3V and Chicago High Tech Investors

@tullman

One of the few lessons that will, hopefully, remain long after the Theranos debacle is yesterday's news -- the criminal trial of CEO Elizabeth Holmes is set for this year -- is that morality is relative. Who you hurt apparently matters more than the simple fact that you're a lying scumbag. It's still perfectly fine in the Valley to actively mislead people about your company's prospects and your product's current state of being, as long as the potential consequences of the fraud are only financial.

Of course, that's never really the case since these phony unicorns and other schemes end up hurting plenty of innocents, including employees, patients, and consumers. The term "innocents" does not, however, apply to the pump-and-dump venture capital investors who promote these scams on a daily basis. No one should ever shed a tear about their losses. 

The prevailing Theranos message seems to be that it's a much bigger and much worse evil when you're lying about medical matters and jeopardizing the health and well-being of actual patients as opposed to just ripping off investors and customers. This means, in retrospect, that Holmes wasn't completely worthless. She will always serve as a bad example and a horrible warning. But only to people who are willing to listen and learn.

Unfortunately, it appears to date that Theranos isn't so big a deal that there aren't plenty of other scam artists and grifters actively pursuing their own corrupt versions of Elizabeth's little fantasy. It turns out that holding your nose and varying the elasticity of your morals by industry and type of victims is mostly a philosophical distinction (like believing you can find the clean end of a shit stick), which doesn't really make a practical difference to most of these people out there who are simply and heedlessly chasing the latest rainbow.

I guess there are those in the Valley whose greed is so substantial and whose values are so fluid that they believe you can successfully split hairs like this as long as you offer the minimally acceptable solution, don't get caught lying to or cheating your customers and/or, most importantly, get out of the game with a profit before things implode and you lose your investment.  Despite the calculated indifference to patients' health, flagrant falsifying of data and results, and shocking lack of oversight or controls at Theranos, we still have the snake oil industry shilling away: fake CBD, "medical" marijuana that cures all ills, useless dietary supplements, and poisonous vaping for kids. These bad behaviors will only change when the market, the users and consumers, and the competition drive the changes. As Bill McGowan, the founder of the phone company MCI, used to say: "These guys have great loyalty to their businesses, but their number one loyalty is to their own tush." 

We are on the cusp of a very large shift in medicine. The major tech companies, especially Google, Apple and Amazon, are moving into health care with a vengeance, and with the clear, but totally mistaken, view that these new opportunities can be addressed and served by applying the same ideas, attitudes, and technologies that they've used to master search, merch and sales. You can confidently predict that we will see another sad parade where the "virtues" of speed and scale trump the need for sanity and safety, and where it's the common folk who ultimately and inevitably pay the price.   

The only good news is that this migration is going to take a lot longer, and be a lot harder, for even the biggest tech guys to pull off. Because they just don't understand that they're entering a whole different world. You'll be banking with Amazon and taking financial advice from Google long before you're going to let them start looking after your health. And this is mainly because there's a completely different level of connection and interaction in medicine. Healthcare isn't suited to brute force solutions, outsourcing, superficial training supported by stupid scripting, and massive scale. Not to mention the fact that, to a frightening extent, we no longer trust Big Tech to do anything not exclusively in its own self-interest.

In health care, people and especially patients and their families don't care how much you know, or how smart you're supposed to be, until they know how much you care. And that's caring about each of them individually and as individuals. Telemedicine may eliminate the need to be physically present -- 7 out of 10 office visits to a doctor could be handled over the phone -- but that doesn't mean that the provider you are talking to doesn't need to have a sufficient bedside manner to actually connect with each patient.

We're willing to walk into Walgreens or CVS for a quick (and often free) flu shot, but not a whole lot more than that (especially with the slimy residue of the inaccurate Theranos testing that took place at Walgreens stores still present). Access and convenience are important, but medical care is also very much dependent on comfort, continuity, and confidence in the person you are dealing with.

Customer service in most tech businesses is an oxymoron to be begin with. Worse yet, low-level, relatively crappy and automated customer support is a conscious, cost-effective goal. Much like TV programming is still about launching the least objectionable shows so that the few remaining people watching broadcast television won't change the channel, support from the tech companies is all about providing the lowest and cheapest customer interaction the companies can get away with.

They have developed extensive strategies around varying tiers of service and support, and escalation paths that virtually assure that, even if you eventually penetrate the massive barriers to reach a human being, the experience won't be much different than talking to a chatbot. This approach simply won't fly with consumers concerned about their health. Automation is never going to replace immediacy, authenticity and actual caring in healthcare.

The absolute core of Amazon's primary business is delivery and yet, if your package disappears, good luck even finding the customer service numbers on the website. They're buried multiple layers deep in order to discourage calls. The problem-solving pages on the Amazon site give you vague instructions and "helpful" suggestions like "wait 48 hours" and hope the thing shows up. Not exactly what you want to hear if your kid's running a fever or you need immediate assistance. The situation is pretty much the same with all of the others as well.  It's about MVO (minimum viable offering) or MRE (minimum required effort) and imposing multiple tiers of pain and frustration before there's any prospect of relief, or any real solution.

Bottom line: until the tech giants wake up and understand that one size and one approach never fits every situation, they can have all the tiers of service they want, but their initiatives in health care will only end in tears all around for the foreseeable future.

Never...

RIP

New INC. Magazine Blog Post from Howard Tullman

Hiring Everybody is Good for Nobody

Startups often rush to grab all the best available talent as quickly as possible. Six months later, the inevitable layoffs happen. Having too many bodies is often a bigger sin than not having enough.

By Howard Tullman

General managing partner, G2T3V and Chicago High Tech Investors

@tullman

In the good old days in Chicago, if you wanted Mayor Rahm Emanuel to swing by your shop and share the podium for the announcement, it was all a numbers game. As long as you were willing to broadcast that you planned to hire a boatload of new bodies, Rahm would show up without fail. He'd attend a door opening if the headcount was high enough.

It really didn't matter what your product or service was (although it never hurt to be a tech biz) and, honestly, no one cared whether you were profitable or even had a viable model with a realistic path toward future profitability. And, it never seemed to matter whether you knew what you were going to do with all these new heads or had an expansion plan that made sense--one that you could successfully manage.

It was all about headcount and bragging rights - a little bit for you and a whole bunch for him and the city. Pretty much everyone cheered each announcement. Most of the media went along with the program, although there was the occasional curmudgeon who would net the new numbers against the layoffs and company closures that were also happening around the same time. This modicum of restrained enthusiasm and realism was regarded as bad form and sour grapes by the administration, which believed that trees actually do grow to the sky.

These days Rahmbo is gone and the new mayor isn't really interested, but we're still stuck with a bunch of startups and entrepreneurs who think that it's a badge of honor (and a source of great company pride) to hire as many people as you can.  And to do so as quickly as you can, even if you have only the foggiest notion of how you're going to train them, deploy them and, most importantly, have them drive, not just the headcount numbers, but the bottom line of the business as well.

It's especially scary these days when there are at least as many businesses tightening their belts and cutting back on their personnel as there are over-funded young businesses (with plenty of investor, as opposed to customer, cash at least for the moment) who are announcing hiring sprees. It's just like we saw in the dotcom gold rush days and with just as little substance or integration and implementation planning. 

When you ask the CEOs who are running these companies for an explanation or why they think they need to hire 50 or 100 new employees during the coming year, you generally get two vaguely philosophical answers, which are equally unhelpful and troublesome. Once you hear this kind of gobbledygook, you can pretty much set your watch and count on an announcement within six months that the company is bagging the recruitment drive or even worse that there will be some essential downsizing and layoffs in order to "right size" the enterprise. The truly ignorant and/or shameless in the bunch will also tell you with a perfectly straight face that while they're firing these folks, they're still looking to hire others.

So, two words to the wise. First, watch out when you hear about (or hear yourself talking about) the company's need to grab critical talent when it's available. This basically means to hire good people in a hurry and then hope that you'll figure out what to do with them down the road. After all, you can't afford to let that great talent go work somewhere else. Keeping them, and keeping them busy in the interim, will be someone else's problem for a while, anyway.

A long time ago the smartest recruiter I ever met warned me to resist this very temptation. He said to always remember that the best person you interview isn't necessarily the best person for the job you're trying to fill and that it's not your role to find them a home in the business. Even more importantly, especially in tech businesses, adding new people to the pile of programmers already working on a development project that's running late generally makes things later, not better.

Most startups never need a bench. You need to find and hire people for real, right now, positions who can hit the ground running and start to make a difference and a contribution from the outset. It doesn't matter whether you've got the money to pay them because - if they're not relatively accretive to the bottom line - they'll be around a lot longer than the short-term cash surplus that you may be enjoying at the moment. Hiring smart is a lot more important than hiring fast. You don't save time or money by hurrying.  

Second, most startups also don't need a branch office, at least for a while. When Intel would announce a new billion dollar fab plant in some foreign country, people used to ask Andy Grove, the mastermind behind Intel's growth and decades of dominance, what he was going to manufacture, he would say that he didn't really know. But he did know that if he didn't start building the plant then, he wouldn't have it ready for when it was needed down the line. I guess a genius like Grove could get away with building massive bricks and mortar building years in advance, particularly in a business with a seemingly infinite demand curve. But new young businesses need to be a lot more careful and conservative about how and when they expand - especially beyond borders.

I tell companies all the time to "nail it before you scale it" and in an age of digital globalization, remote intelligence, and virtual everything, it's harder and harder to make the case that a company barely out of its britches should be opening offices and facilities all over the place. Again, great for bragging rights among your back home peers, but very tough on the bottom line and full of costly surprises. I love Ireland as much as the next guy, but you'd have to show me some very compelling math to prove that it makes sense to spend a fortune on flights, fixtures, and facilities in some foreign country when you haven't figured out how to make a profit at home.    

Bottom line: your business doesn't need a bench or a branch for a long time.

DECADE - 2016