The best way to build a digital health company
Last week our team launched Lantern, an online and mobile tool that evaluates your mental health in minutes. Personally, this moment was one of great pride for what our team has been working on for over a year—but also one of anxiety and worry. (Luckily, we now have an app for that). Will people actually buy our product? Will anyone even notice? If people buy it, will they continue to use it?
Founders in any industry ask themselves these questions every day, so these aren’t novel feelings. But running a startup in healthcare adds an additional layer that’s even more important than the fundamentals of your business and market opportunity: will user health actually improve? And will it be significant enough to publish results (i.e. through a randomized controlled trial)? I believe most digital health companies fail to get off the ground trying to answer this. It’s much easier to get someone to buy something than it is to get them to buy something AND also prove to the scientific community that your product is effective.
Will people actually buy our product? Will anyone even notice?
The challenge lies in the amount of runway needed to execute on a publishable scientific study. No startup can likely take this on themselves, and as a result they have to find a partner—which takes lots and lots of time. Even if/when you lock down a pilot, the pilot itself might take a year to complete, and another year to analyze the data and publish the results. That’s potentially two plus years of runway that most companies don’t have, especially since you’re probably not even selling the product yet.
So how does one cross this chasm? In my experience there seem to be three possible paths:
1. Bootstrap: You grind it out with yourself and maybe a few other founders for a REALLY long time until you can get beyond the first pilot hurdle while expending the least amount of cash resources you have.
2. Sell the dream: You’re a great salesman and you convince someone to give you lots of $$ before you actually have anything that really works.
3. Build on what’s already there: Use science that’s already established and validated, and consumerize it.
Building a new business is hard. Building a business in healthcare is even harder.
I’ll focus the rest of my thoughts on the third option, because I believe it is the best way to build a digital health company. It’s also something that Lantern used in order to win at SXSW and close our $4.5M series seed, and what companies like Omada and Lumosity have taken even further. By finding published studies and partnering with the researchers behind them, you’re much better positioned early on since your methods, programs, and models have already been proven to be effective and adapt them to make a consumer-grade product out of it. In our case, this meant working with academics from Stanford, Washington University in St. Louis, and Penn State who have worked at the intersection of technology and mental health research for decades. They had the knowledge and evidence to prove that online cognitive behavioral therapy programs work and online coaches could help manage anxiety and negative body image. What we brought to the table was a business model and the technology to make their research affordable and accessible to anyone wanting to improve their emotional well-being.
Building a new business is hard. Building a business in healthcare is even harder. Lantern chose the approach we did because we believe it’s the most responsible and effective way to tackle the business of health and removes risk for you, potential investors, and for the users relying on your product to make a real difference in their lives.
Alejandro Foung is co-founder and CEO of Lantern, an online and personalized service that allows anyone to strengthen their emotional well-bring with the care and support of a licensed professional. Lantern is on a mission to expand access to high-quality, evidence-based care that helps you strengthen your emotional well-being at an affordable price.
Prior to founding Lantern, Alejandro was a founding team member at Huddler, responsible for growing the platform from zero to over thirty million visitors per month. Alejandro was also the first sales and business development hire at Trulia and launched their Trulia Pro product and sales team. Before Trulia, Alejandro was an early employee at consumer technology companies like eBay and NexTag working on both product and business development. Alejandro received his B.A. in Psychology from Stanford University.